International Seaways, a major tanker operator, has been actively upgrading its fleet amidst a strong tanker market and increased demand for oil shipping. With the global fleet aging and oil demand expected to grow, the company is positioning itself to meet future challenges by modernizing its vessels and capitalizing on market opportunities.
Fleet Modernization and Market Conditions
International Seaways has taken strategic steps to replace older vessels with more efficient ones. During the second quarter, the company received six eco-friendly Medium Range (MR) tankers while selling three vessels that were 15 years or older. This move reduced the average age of its MR fleet by one year. CEO Lois Zabrocky emphasized the need for newer ships as the global tanker fleet averages over 13 years old, and the current order book, representing about 11% of the fleet, is insufficient to address the aging issue.
Oil Demand and Market Outlook
According to S&P Global Commodity Insights, global oil demand is projected to grow by 1.7 million barrels per day (b/d) in 2024, with significant growth in China, India, and other major Asian markets. International Seaways anticipates oil demand growth of 1 to 1.5 million b/d in 2024. Despite potential supply disruptions and geopolitical risks, crude tanker demand is expected to grow by 8%-9% in 2024 but decrease by 3.5%-4.5% in 2025. Product tanker demand is also forecast to rise by 5%-6% in 2024 before declining by 3%-4% in 2025.
Freight Rates and Market Performance
International Seaways reported an average fixture rate of $373,000 per day, with specific rates as follows:
- VLCCs: Averaged $46,400 per day in Q2.
- Suezmax: Averaged $45,000 per day.
- Aframax: Averaged $31,500 per day.
- LR1 Spot Fixtures: Averaged $53,100 per day.
- MR Spot Fixtures: Averaged $35,000 per day.
Platts, part of S&P Global Commodity Insights, reported an average freight rate of $50.14/mt for the 70,000 mt US Gulf Coast-UK Continent route in January 2024, up from $43.21/mt in Q4 2023. Rates for the VLCC US Gulf Coast-UK Continent route were assessed at $2.69 million, while the VLCC US Gulf Coast-China route was assessed at $6.85 million for loading in late August to September.
International Seaways’ proactive approach to fleet modernization and strategic positioning in the tanker market reflects its response to evolving market dynamics and growing oil demand. With a focus on sustainability and efficiency, the company is poised to navigate the challenges and opportunities in the global shipping industry.
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Source: S&P Global
