How did the oil price influence the freight rates for VLCC crude oil tankers between 2005 and 2015?
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- Master Thesis 
The subject of this thesis is “How did the oil price influence the freight rates for VLCC crude oil tankers between 2005 and 2015?” The oil price is important for the development of world economic activity, as oil is a primary energy source. Given that oil is mainly transported in tankers, the oil price has substantial influence on crude tanker freight rates. The period 2005- 15 was eventful with large movements in both the oil price and freight rates. The analysis in this thesis is based on a basic supply and demand model, as well as a more specific model of the shipping market developed by the shipping economist, Martin Stopford. The correlation between the oil price and freight rates varies across time, and the oil market affects freight rates both directly and indirectly. The freight market is influenced by predictable factors such as economic activity and fleet growth, which develop gradually over time. However, “random shocks” is the most important variable in Stopford’s model. One such shock was the global financial crisis, when oil prices and freight rates dropped significantly. While oil prices recovered quickly, freight rates remained low for years. Another random shock was the American shale oil revolution, which led to substantial increases in oil production. Subsequently, the Organization of the Petroleum Exporting Countries sacrificed their objective to maintain stable and high oil prices and instead chose to protect their market share. Consequently, the oil prices dropped, while the freight rates started to increase following the growing demand for cheap oil. This thesis demonstrates how unpredictable elements, such as oil price movements, have influenced the tanker market, and thus the fortunes of tanker owners. Fluctuations have always been an important part of the shipping market, and make the shipping sector an interesting object of study.