’Modest’ ship orders and the trading patterns determined by Russia’s invasion of Ukraine and Western sanctions imposed in response mean high tonne-mile demand and improved rates will remain in place for at least another 18 months, the brokerage says
European Tonne-Mile Demand Surges
In response to the Ukrainian invasion, the EU took measures to ban the import of all Russian refined products starting from February 5, 2023. Additionally, the G7 countries imposed a global price cap, restricting Russian access unless the refined products are sold at $100/barrel or less.
EU nations have turned to other countries, such as Saudi Arabia, India, and the United States, to fulfill their diesel/gasoil needs, significantly increasing European tonne-mile demand.
Sanctions Spark Surge
The sanctions imposed on Russia since its invasion of Ukraine has led to a notable increase in demand for product carriers. Owners of product tankers have benefited from this development as freight rates from Handys up to LR2s all reached highs in 2022. While rates have softened somewhat in 2023 to date, they remain strong from a historical perspective.
There is no sign that a resolution to the conflict in Ukraine is close and even when the parties reach a ceasefire and stop the hostilities. Therefore, tonne-mile demand and rates for product tanker will remain strong at least through 2024.
Did you subscribe to our daily Newsletter?
It’s Free! Click here to Subscribe
Source: Riviera
