The recent turmoil in global financial markets has exerted significant downward pressure on oil prices, reaching levels not witnessed since the COVID-19 pandemic. The heavy slide in prices commenced last week, resulting in an 18% drop to a four-year low. However, prices subsequently recovered to $64 per barrel following President Trump’s decision to temporarily pause his reciprocal tariffs (excluding those on China) for 90 days, reports Gibson.
Crude Oil
East (Middle East Gulf & Asia)
- AG VLCC: The AG VLCC market is facing a downturn with lower rates due to limited activity and an increasing number of available vessels. More volatility is expected as April cargoes are not fully covered. Owners are hopeful that the release of May stems next week will increase demand and stabilize or improve rates. Today’s assessments are AG/China at WS53 and AG/USG at WS29.5.
- Suezmax (Basrah/West & East): The Basrah/West Suezmax market looks firmer, with charterers managing to secure vessels around WS55. However, with a busy Friday for short-haul voyages and a shortage of prompt vessels, owners are expected to push for 140,000 dwt at WS60 via a ship-to-ship transfer. Rates heading East are also firmer due to limited available positions, although VLCCs entering the market may limit owners’ ability to push rates above 130,000 dwt at WS110.
- Aframax (AG & Asia): A quiet week in the AG region has led to a gradual decline in Aframax rates, with the TD8 route falling below WS150. Conversely, the Mediterranean market has seen increased activity, benefiting owners in the Red Sea who may now look to move westward, using the strong Med market as leverage for Eastbound cargoes. In Asia, Aframax indices have improved to reflect current market levels, with the TD14 route assessed at 80,000 dwt at WS135, a slight increase from the start of the week. Chartering activity for the final part of April has picked up, and while the tonnage list appears balanced, owners anticipate more cargoes to emerge and may test higher levels if market momentum shifts in their favor.
West Africa
- VLCC: The VLCC market in West Africa is showing increased activity, a positive sign after a period of stagnation. However, the lack of significant improvement in freight rates suggests continued market caution, potentially influenced by failed fixtures and increased vessel availability. Rates here are stronger than in adjacent markets, indicating some resilience, but the situation remains uncertain. Today’s assessment for WAF/East is around WS59.
- Suezmax: Suezmax markets in West Africa remain relatively stable. With VLCCs beginning to participate, further improvement could be seen once this tonnage is absorbed. While slightly lower rates might be achievable for the right voyage, owners are likely to seek WS105 for the TD20 route today.
Mediterranean
- Suezmax: The TD6 Suezmax route has seen a slight decrease this week to WS125, although vessel availability in the Mediterranean remains tight, suggesting a potential quick rebound in rates next week. For Libya/Ningbo voyages, rates are currently around $5.7 million, but with some charterers showing strong interest, slightly lower levels might be achievable.
- Aframax: The Aframax market in the Mediterranean experienced significant volatility this week, with a fifty-point difference between the highest and lowest concluded rates. Despite the CPC coming back online for Suezmaxes, Aframax owners initially showed a lack of confidence, with rates correcting down to WS150 on Monday. While some deals were concluded around this level, this drop was somewhat surprising given the underlying market fundamentals and a healthy program from Libya, especially with the approaching Easter holidays. As vessel availability gradually decreased, the positive rate correction steepened. However, with Suezmaxes now becoming competitive for Aframax cargoes, further significant gains are unlikely unless the ceiling for Suezmax rates increases.
US Gulf/Latin America
- VLCC: US Gulf VLCC exports have seen a significant shift this week, with fixture levels falling below previous benchmarks following a period of limited activity. This decline has raised concerns among owners as more vessels ballast towards the region. Brazil exports have also slowed, resulting in softer rates by the end of the week. The outlook for next week appears challenging as adjacent markets also struggle. Today’s assessments are USG/China at $8.25 million and Brazil/China at WS57.
North Sea
- Aframax: Aframax owners in the North Sea are observing the more volatile markets elsewhere while experiencing a relatively stable market. After a brief opportunity to push rates, momentum waned, and rates settled in the mid-WS130s. Those seeking Trans-Atlantic voyages have either taken lower rates to cover bunkers or simply ballasted. With the Mediterranean market looking more attractive, many owners are likely to reposition their vessels south to capitalize on potentially lucrative business and tighter vessel availability while it lasts.
Clean Products
East
A quiet week for Long Range (LR) tankers has resulted in charterers exerting downward pressure on rates due to uneventful fixing. The TC1 route (75,000 mt Middle East Gulf to Japan) has seen a correction to WS130, and UK Continent voyages are at $3.75 million levels. A similar situation prevails for LR1 tankers, with the TC5 route (55,000 mt Middle East Gulf to Japan) now at WS140 and Westbound voyages at $2.9 million. Owners are hoping for a pre-Easter surge in activity, but this currently appears unlikely.
UK Continent
MR (Medium Range) owners trading in the UK Continent have experienced a tough week characterized by limited inquiries and softer targets pulling rates down. The TC2 route (37,000 mt UK Continent to US Atlantic Coast), which started the week at WS160, now seems a distant high point. There has been limited quoting of Transatlantic (TA) stems, very few Cross-UK Continent (XUKC) fixtures due to Handysize vessels being more competitive, and a lack of West Africa (WAF) inquiry as larger LR2s handled those cargoes. This has allowed charterers to regain the upper hand, and by Friday, rates for TA voyages have fallen to WS125. With limited outstanding cargoes and a reasonably well-supplied tonnage list, a significant improvement in this market is not anticipated, although the stronger Mediterranean market may attract ballast tonnage in that direction.
Handysize owners in the North Sea have had a good end to the week, with sustained demand tightening the front end of the tonnage list. The latest XUKC fixture (TC23, 30,000 mt) has been concluded at WS155 multiple times. With MR rates softening and limited long-haul demand, MR vessels are expected to act as a cap to prevent Handysize freight rates from increasing significantly, as larger ships now look for short-haul, 30,000 mt “time killer” voyages.
Mediterranean
Unlike their continental counterparts, the MR sector in the Mediterranean has benefited from the stronger Handysize market. With specific product grades requiring coverage, some owners have been able to capitalize on the situation. Owners have managed to maintain relatively stable rates throughout the week, with 37,000 mt Transatlantic voyages fixing around WS155-165. However, as mentioned earlier, the key driver in this market has been the short Cross-Mediterranean (XMed) stems, providing owners with more options. All eyes are on the sustainability of the Handysize market, as it is currently the primary driver and any vessels ballasting towards Europe are expected to set their AIS for Gibraltar, indicating their likely destination.
Dirty Products
Handy
- North: The North European Handysize market has continued its strengthening trend from recent weeks, albeit at a more gradual pace. Limited vessel availability at the beginning of the week was quickly reduced by fixtures. Rates started around WS240 and, despite some relets thinning the list further, firmed up to WS245 for 30,000 mt cargoes by the week’s end. The outlook for next week suggests a continuation of this trend, with limited new vessel arrivals and a steady flow of cargoes likely pushing rates higher.
- Med: The Mediterranean Handysize market also saw increased overall activity and a steady firming of rates, moving from 30,000 mt at WS 222.5 at the start of the week to a repetition of WS225 by the close. Consistent inquiry absorbed available vessels, keeping the tonnage list tight and allowing owners to achieve a further 2.5 point increase. Looking ahead, workable tonnage is expected to be available at the top of the list early next week, but a quick start to activity could quickly shift the balance in favor of owners.
Panamax
The Panamax market experienced an active week, with chartering activity clearing tonnage in both the US and Europe. A mix of local, Transatlantic (TA), and US-based inquiries kept tonnage in Europe busy, finally capitalizing on the number of vessels positioned there. Rates for UK Continent to US Gulf voyages remain in the WS110-115 range for 55,000 mt cargoes, with deals still being concluded on a case-by-case basis.
However, with more vessels arriving from the US, owners are hoping for continued activity. In the US Gulf and Caribbean, the TD21 route (40,000 mt US Gulf to UK Continent) saw a significant surge this week, firming by approximately 25 points to WS203.75 by the close of business in London before gaining another 13 points by the week’s end. This was mainly driven by consistent, less visible (under-the-radar) activity and a notable number of vessels heading towards Europe.
MR (Medium Range)
The MR market in both the North Sea and the Mediterranean saw a generally quiet week in terms of full cargo stems, with part cargoes being the more common form of employment. The limited full stem activity observed was primarily in the Mediterranean, where the equivalent of a 45,000 mt cargo at WS155 was repeated. Tonnage in the Mediterranean has been concentrated in the West Mediterranean throughout the week. Should inquiry emerge in the East Mediterranean early next week, owners are expected to push rates towards the WS170 mark for 45,000 mt cargoes.
In the North Sea, naturally positioned vessels have remained scarce, with local Panamax vessels competing for and securing some Cross-UK Continent (XUKC) MR cargoes. More MR vessels are anticipated to arrive from the West Mediterranean around the start of the third decade of the month; until then, owners’ rate ideas for the next concluded fixture are in the WS165-170 range for 45,000 mt cargoes.
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Source: Gibson
