Crude Tanker Market Outlook For 2025

By
Mfame Editor
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29

The crude tanker market is poised for an intriguing year in 2025, with key trends favouring larger vessels like VLCCs (Very Large Crude Carriers) over mid-size tankers such as Suezmaxes and Aframaxes.

Key Market Dynamics

  1. Economic and Geopolitical Uncertainties
    • Despite uncertainties, crude tanker owners can expect attractive earnings in 2025.
    • Slow fleet growth and increased long-haul crude trade will maintain high tonnage utilization, particularly benefiting VLCCs.
  2. Impact of Refinery Activity in Oil-Producing Regions
    • The rise in refinery runs in the Middle East and West Africa will cap global crude trade growth.
    • However, higher tonne-mile demand from expanded long-haul routes will outpace this trade stagnation.

Trade Patterns and Vessel Demand

  • Long-Haul Trade Gains Momentum
    • Crude production growth in the Americas and demand growth in Asian refineries will drive long-haul trade.
    • Routes such as AG (Arabian Gulf)-China and Americas to Asia will boost VLCC demand.
    • Canadian crude exports to Asia via the TMX pipeline will further support VLCC utilization.
  • Challenges for Mid-Size Tankers
    • Suezmaxes will face pressure due to increased competition from VLCCs on stretched routes like the Cape of Good Hope (CoGH).
    • Declines in West African crude exports to Europe (due to Nigeria’s Dangote refinery) will hurt Suezmax demand.
    • The contraction in European and U.S. refinery throughput will cap demand for mid-size tankers, although Transatlantic trade will provide some support.

Fleet Growth and Supply Dynamics

  • VLCCs: Limited fleet growth with only six deliveries by the end of 2025, supporting strong rates.
  • Suezmaxes: A supply increase with 30 new vessels (5% of the fleet) could pressure rates.

Risk Scenarios for 2025

  • Disruptions to long-haul trade routes (e.g., geopolitical crises or canal blockages) could affect market balance.
  • Variations in oil demand or refinery activity could shift trade patterns and impact earnings across vessel types.

The 2025 crude tanker market will see:

  • VLCCs thrive on long-haul trade expansion and limited fleet growth.
  • Mid-size tankers are facing challenges from an influx of tonnage and reduced short-haul trade opportunities.

The market continues to favour larger vessels, reinforcing economies of scale in global crude transport.

For detailed insights and scenario-based forecasts, subscribing to Drewry Crude Tanker Forecaster is recommended.

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Source: Drewry