The global tanker market is experiencing a significant surge in rates across all segments, driven by high demand and tightening vessel supply. The market is particularly active for VLCCs, with a perfect storm brewing due to robust demand from the U.S. Gulf and potential production hikes from OPEC+.
VLCC Market
The Very Large Crude Carrier (VLCC) market is exceptionally busy, with a very limited number of available vessels. Rates are climbing at a “breathtaking pace,” with a key route (MEG/Taiwan TD3C) now trading well above the WS 65 mark. This high demand is coming from both the Middle East Gulf (MEG) and the U.S. Gulf (USG), with the latter’s strong activity pulling ships from other regions like West Africa and Brazil.
This tightness in vessel availability is exacerbated by ships ballasting from the East to the West to meet the USG demand. The market is also being influenced by speculation that OPEC+ may increase production on September 7th, which has pushed futures prices for TD3C paper above WS 70. This combination of factors points to a continued bull market for VLCCs.
Suezmax Market
A recent increase in activity from West Africa has put the Suezmax market under pressure, highlighting the squeezed freight parity across all regions. With strong demand from both the Middle East Gulf and the USG, owners have multiple attractive options. The market for the key West Africa to UK Continent (TD20) route is firm at 107.5-110, and there are very few ships available for a second-decade fix. The limited supply, with only a few vessels making their way to the East, gives owners a strong position to negotiate for higher rates.
Aframax Market
In contrast to the larger tanker segments, the Aframax market has seen a downward correction in some regions.
- North Sea: Rates have softened due to a sufficient supply of vessels relative to demand. The tonnage list is primarily dominated by “relets” (chartered-out vessels), which are actively taking on early cargoes and putting pressure on independent owners.
- Mediterranean: The market has remained relatively stable, with charterers covering their cargo needs in advance. The tonnage list is balanced, and there is a sufficient supply of ships to meet demand for the mid-September window.
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Source: Fearnleys
