After having roared into the WS 80’s MEG/East rates have dropped back into the low WS 70’s, by and large led by oilco-trader relets taking a less aggressive stand, simultaneously making it more palatable when having the “buyer” hat on.
VLCC
Following a strong period, rates for VLCCs in the Middle East Gulf (MEG) to the East have declined from the WS 80s to the low WS 70s. This drop is attributed to relets from oil companies and traders taking a less aggressive stance. Despite this, a few weeks ago, rates starting with a “7” would have been unthinkably low. The market is now looking ahead to October stems as the September program nears completion. The Atlantic market, particularly for U.S. Gulf (USG) exports, remains a strong alternative, and geopolitical tensions are a major factor making predictions difficult.
Suezmax
Despite a significant drop in volumes from West Africa, the Suezmax market has maintained its levels. This is due to an increase in US Gulf stems and continued activity in the Liza, Brazil, CPC, and MEG markets, which are keeping the vessel supply tight. While the front end for the TD20 route is very sparse, rates are not expected to exceed WS 110-112.5. From an earnings perspective, rates from West Africa are sufficient, with owners attempting to keep eastbound MEG rates at WS 120 and westbound rates around WS 60.
Aframax
In the North Sea, a small number of cargoes have led to a downward correction in rates, and this trend is expected to continue. Some vessels may find alternative employment in the US Gulf, where rates have been rising again. The Mediterranean market, on the other hand, is moving sideways with limited activity. The tonnage list is fairly balanced as some vessels are ballasting into the area from a weak continental market. The overall trend remains sideways, but with potential for downward pressure unless market activity increases.
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Source: Fearnleys
