Volatile First Half of 2025: US Policy, Sanctions, and War Shape Tanker Markets

• The return of President Trump triggered a wave of trade and geopolitical tensions impacting global tanker dynamics.
• Sanctions on Russia, Venezuela, and Iran have realigned trade flows and temporarily spiked freight demand.
• Market fluctuations were also driven by conflict in the Middle East, changes in regulations like FuelEU, and varying oil production strategies by OPEC+.
• Spot earnings and tanker rates remained under pressure in many regions despite ongoing disruption

US Foreign Policy Drives Market Volatility

The re-election of President Trump set the tone for a turbulent 2025. While the Biden administration ended by sanctioning 156 mostly Russian tankers, Trump quickly shifted focus to new sanctions, trade tariffs, and geopolitical pressure.

• Sanctions Impact:
  Sanctions on Russian vessels disrupted short-term trade, forcing India to temporarily seek oil from West Africa, the Americas, and the Middle East, which boosted demand for VLCCs and Suezmaxes.
  Trump reinstated pressure on Venezuela and Iran, introducing strict measures and targeting Chinese refineries—shaking tanker markets and affecting supply chains.
  Despite rhetoric, his administration was slow to tighten sanctions on Russia, allowing more mainstream tankers to re-enter Russian crude trade.
• US-China Trade Conflict:
  The USTR accused China of unfair maritime practices, proposing steep port fees for Chinese-linked vessels. Though the proposed penalties were diluted in April and delayed until October, initial uncertainty froze timecharter activity.
  In April, Trump launched a global tariff campaign with a baseline 10% applied to all partners, later adjusting the policy to exempt some nations while maintaining higher duties on China.

Middle East Conflicts Disrupt Tanker Movements

The US’s stance on Iran escalated tensions, resulting in Israel’s 12-day war against Iran. This briefly lifted freight rates as risk premiums surged but quickly deflated after ceasefires and retaliatory moves played out.

• The US bombed Houthi positions to safeguard Red Sea shipping lanes, which temporarily increased confidence in the Bab-el-Mandeb transit route.
• Despite early hopes, the Russia–Ukraine conflict remained unresolved, and the US took a backseat on applying stronger sanctions compared to the EU and UK.

Climate Regulation Moves Forward, US Pulls Back

• The EU’s FuelEU regulation took effect in January, requiring reduced GHG intensity for fuels used on voyages linked to the bloc—implemented with minimal disruption to freight markets.
• The IMO advanced its net zero strategy for 2028, though the US withdrew from talks, casting doubt on its eventual adoption.

Oil Market Shifts: Prices, Production & Policy

• OPEC+ Output Rises:
  From April, OPEC+ raised production targets monthly, aiming to reclaim market share. While exports rose 1% YOY, countries like Kazakhstan overproduced, prioritizing national interests.
  Iranian exports defied US sanctions, increasing by 9%.
• US Output Stagnates:
  Lower oil prices (avg. $70.8/bbl, down $9 YOY) and a narrowed fuel oil spread cut into US upstream enthusiasm.
  Trump’s goal of lowering gas prices succeeded partially, but US rig counts dropped 10% (–50 rigs) as drilling became less profitable.

Refining Market Transformation

• Closures: Houston’s Lydondell refinery shut down in March. Scotland’s Grangemouth and Germany’s Wesseling stopped processing crude in April.
  Prax’s 113kbd Lindsay refinery entered liquidation in June.
• Additions: Nigeria’s Dangote refinery ramped up production, while Mexico’s Olmeca refinery continued to struggle.
  Result: West African CPP imports declined, lowering clean tanker demand in the Atlantic.

Fleet Supply Trends

• Orders Down, Deliveries Up: Only 106 new tanker orders signed this year vs. 301 in H1 2024. Deliveries rose sharply to 86 (from 34).
• Scrapping Minimal: Only 8 tankers scrapped so far, similar to 2024.

Tanker Asset Prices Mixed

• Newbuild prices have softened slightly but remain in line with 2024 levels.
• 5-year-old tanker values fell by 7–13% depending on type.
• Older tankers still fetch double their pre-war value in some cases.

Tanker Spot Market Overview

Crude Tankers:

• Middle East & Asia:
  VLCCs from AG to China fell to WS47; sluggish demand continues.
  Suezmaxes to the West firmed at WS50; East-bound dropped to WS105.
  Aframax rates weakened to WS120 (TD14).
• West Africa:
  VLCC demand improved on UKC routes (WAF/East around WS50).
  Suezmaxes to UKC at WS82.5, to East at WS90–95.
• Mediterranean:
  Suezmax rates dropped to WS92.5 on TD6; Libya/Ningbo est. $4.3m.
  Aframaxes weakened; CPC dropped from WS160 to WS147.5.
• US Gulf/LatAm:
  VLCC rates dipped—USG/China at $7m, Brazil/China at WS50.
  Aframaxes held steady at WS140–147.5.
• North Sea:
  Minimal activity; WS120 last indicated.

Product Tankers:

• East of Suez:
  LR2s saw steep drops (TC1 to WS120, $3.5m West).
  LR1s steadier (TC5 at WS147.5).
  MRs corrected downward—TC17 at WS190, TC12 at WS145.
• UK Continent:
  MRs dropped below WS100, even reaching WS90.
  Handies down to WS115.
• Mediterranean:
  MRs steady at WS105 for Med-TA. Handies traded around WS130 on XItaly.

Dirty Products:

• UKC:
  Handies saw little demand, ending around WS257.5.
  MR levels face downward test toward WS175.
• Mediterranean:
  Handies adjusted to WS225–230.
  MRs likely to test WS165 soon.
• Panamax:
  UKC-TA slow at WS110–115.
  TD21 surged to WS190 on tight supply.

Rates & Bunker Prices Snapshot (as of July 3)

Bunker Prices ($/t):

The first half of 2025 has been marked by uncertainty, disruption, and shifting dynamics in global tanker markets. With the second half poised for continued geopolitical complexity and regulatory evolution, stakeholders across the maritime industry must remain agile.

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Source: Gibson

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