The crude tanker market indeed experienced a “disappointingly weak first quarter” in 2025, failing to see the strong winter market many had anticipated. While there were signs of a rebound in Q2, as of late May/early June, this appears to be faltering. The key question is whether this Q2 improvement was a temporary blip or driven by fundamental shifts, reports Gibson.
Crude Oil
East
The VLCC AG market continues its bearish trend, experiencing a notable decline in rates this week, with no clear bottom in sight for owners. The increasing availability of tonnage for the second decade of June, coupled with limited inquiry, is exacerbating the supply-demand imbalance. This mismatch is contributing significantly to the downward pressure on rates. The outlook remains cautious, with continued softness expected until a more balanced market emerges. Current rates are WS52 for AG/China and WS28 for AG/USG.
The Suezmax AG market has been sluggish, with charterers enjoying a well-stocked tonnage list. There’s strong interest in AG West runs, with today’s levels around 140 x WS47.5 via C/C. Rates for eastward voyages have remained stable around the 130 x WS95 region. With sentiment reportedly improving in the East, a significant drop in these rates next week appears unlikely.
In Asia, Aframax activity picked up late in the week, but not enough to undo the damage already inflicted on what was an already soft market. A key “vanilla Vitol cargo” is expected to set the pace for next week. While other requirements have surfaced, potentially encouraging owners to resist further rate reductions, charterers are in no rush to cover, given the ample tonnage available. The critical question remains whether the market has bottomed, especially as daily earnings dipped below the $20,000 mark. If it has, rates are likely to trend sideways due to a lack of demand for June loadings. The TD14 route has hit year-to-date lows, printing at WS104.75, a further decline from its previous low of WS108 in January.
West Africa
The WAF VLCC market has seen a significant decline in inquiries this week, resulting in minimal reported cargoes or fixtures. Charterers are adopting a cautious stance, showing little urgency for their third-decade June stems. With rates in adjacent markets also trending downwards, WAF is expected to follow suit. This lack of activity and bearish sentiment suggests that owners will face challenges in securing fixtures at recent levels. The outlook remains bleak, with external market influences likely to shape future demand and freight levels. Current rates for WAF/East are in the region of WS52.5.
The Suezmax market in West Africa also experienced a decline this week. However, a firming US Gulf Aframax/Suezmax market towards the end of the week is giving owners some hope for improvement on their next fixtures. The TD20 route is assessed at around WS82.5 today. With the early side of the tonnage list thinning out, there’s potential for charterers to be caught off guard if they need to move prompt barrels. Owners are expected to be more bullish next week and attempt to push up market rates.
Mediterranean
For Suezmaxes in the Med, the TD6 route is reportedly on subjects at WS92.5, but owners with available ships are reluctant to compete at these levels, suggesting charterers will struggle to repeat such rates. The improvement in the US Gulf/West Africa market is offering an alternative outlet for vessels stuck in the rather slow Mediterranean market. Rates for Libya to Ningbo are firmer, with next-done levels expected to be around $4.7 million.
As the week progressed for Med Aframaxes, levels were corrected downwards due to less-than-encouraging cargo volumes. WS117.5 was established as the low, a notable drop from the WS130s seen in the previous cycle. However, just as optimism was waning, US markets suddenly became active, rallying from WS115 to WS147.5 with several cargoes still uncovered. The immediate effect of this in Europe has been a boost to sentiment. Furthermore, many West Med and UK Continental units are now likely to ballast across the Atlantic on speculation, which will benefit European markets, at least in the short term. While it’s too early to predict if owners can fully recover recently lost Worldscale points, given that fixing dates are further out, the immediate slide in rates appears to have stopped.
US Gulf/Latin America
The VLCC US Gulf export market has experienced one of its most rapid slowdowns in the last 12 months, with activity grinding to a temporary halt this week. This sudden shift has led to a steep decline in rates, reflecting a weakening sentiment that deteriorates daily. Owners are likely to face a challenging market in the coming week, especially as more vessels enter the area, intensifying competition. The combination of reduced capacity and increased tonnage could further exacerbate the downward pressure on rates. Conversely, the Brazilian export market had a relatively active week, but its momentum was overshadowed by weakening conditions elsewhere, ultimately leading to a decline in rates. Current calls are $7.4 million for USG/China and WS51 for Brazil/China.
Clean Products
East
LRs (Long Range): This week saw a correction across both LR sizes, with a slight easing in the flow of stems allowing charterers to curb owners’ enthusiasm. TC1 (MEG to Japan) for LR2s has corrected to 75 x WS137.5, while West runs (MEG to UKC/Mediterranean) have been tested to $3.75 million. For LR1s, TC5 (MEG to Japan) sits at 55 x WS155, and West runs are at the $2.9-$3.0 million levels. Despite this negative correction, market lists remain balanced, and off-market activity has been decent. Expect these levels to trade flat for the first half of the new week.
MRs (Medium Range): It was a slow week for MRs in the Arabian Gulf, with rates tumbling from start to finish. TC17 (MEG to East Africa) ended the week down at 35 x WS195, and TC12 (MEG to Singapore) is at 35 x WS155. An uptick in inquiry is expected early next week due to upcoming holidays, but with a well-supplied tonnage list, little movement in levels is anticipated.
UK Continent
MRs: The MR market remained active around the end-of-month fixing window, keeping rates firm due to a shortage of tonnage. Rates increasing in the US Gulf and West Africa have drawn tonnage into those regions, resulting in a short supply of ballast tonnage in the UK Continent. Rates reached a peak equivalent to 37 x WS157.5 for Transatlantic (TA) voyages. However, sentiment has shifted somewhat heading into June, with expectations of a slowdown in “summer grade UMS” (unleaded motor spirit) flow. Pressure on rates has started from the south, and a generally quieter market next week is signaling a decidedly bearish outlook.
Handies: With bank holidays across Europe, there was a surge of Handy inquiry and fixing on Tuesday/Wednesday in the North. Cross-UK Continent (XUKC) was the main driver, with freight firming to WS185 on a 30 x basis (or roughly WS185 for a 30kt cargo). As the week progressed, activity slowed, but with limited supply on the front end of the list, this was not surprising. The weekend break arrived timely for charterers, hoping for more firm itineraries when they return on Monday. A side note: MRs are ending the week softly, indicating that larger units could potentially be in play for short-haul runs early next week.
Med
MRs: With surrounding markets being busy, MR tonnage in the Mediterranean has remained tight, causing some upward pressure, particularly with grade-sensitive stems. Inbound tonnage has been minimal as both the West Africa and US Gulf markets have improved. Last done levels sit around 37 x WS160 for Med/UKC basis naphtha, with a UMS (unleaded motor spirit) Sines-TA on subjects at 37 x WS140. Similar to the Handies, tonnage availability looks healthier for next week, which could be a catalyst for rates to soften a bit.
Handies: As the shorter working week concludes, the Handy Med market remains divided. The week opened at 30 x WS180 levels, but a tight prompt window and grade-dependent stems saw rates jump to a high of 30 x WS205 in the East Med. Additionally, a couple of X-Italy runs at 30 x WS210 only served to exaggerate bullishness. In the West Med, the last done rate is around the 30 x WS190 mark, highlighting this market split. Tonnage looks healthier going into next week, implying that rates could soften. However, if load port and grade-dependent stems continue to flow, this market divide might take longer to diminish.
Did you subscribe to our daily Newsletter?
It’s Free Click here to Subscribe!
Source: Gibson
