Gibson Shipbrokers noted this week that a tentative ceasefire between Israel and Hamas has renewed expectations that Red Sea transits might gradually return to normal. With the Houthis stating they will pause attacks on commercial shipping so long as the ceasefire holds, the industry is watching closely — yet shipowners and insurers remain cautious. A full return of confidence may take far more than a temporary pause, and any meaningful shift in routing behaviour is still uncertain. But if the Red Sea becomes reliably safe again, the tanker market could feel the impact quickly.
Shifting Tonne Miles and Clean Trade Dynamics
Over the past year, large-scale diversions around the Cape of Good Hope dramatically reshaped clean tanker flows. More than 90% of clean cargoes travelling from the Arabian Gulf and West Coast India to Europe opted for the longer Cape route in 2024, boosting tonne miles and keeping freight rates high — with LR2s emerging as the major beneficiaries.
As rates soared, VLCCs and Suezmaxes increasingly stepped into clean trades, softening LR2 earnings and cannibalising some market share. While this trend has cooled, Suezmax involvement remains significant.
In 2025, however, a notable shift began: clean volumes to Europe via the Suez Canal climbed sharply, averaging about 40% so far this year. This partial return has already reduced LR2 tonne-mile demand, and a full normalisation of Red Sea transits would deepen that decline. LR1s and MRs — which lost ground during the Cape-routing boom — could regain territory, especially for Mediterranean discharge programs. Yet any uplift may be tempered by softer US Gulf to Europe demand on MRs.
Dirty Tankers: Smaller Impact, Subtle Shifts
Dirty trades saw far less disruption from the Red Sea crisis, simply because fewer global crude flows depended on the route. Even so, 2025 brought accelerating volumes returning to the Suez Canal, supporting steady demand for Suezmaxes.
A complete reversion back to Red Sea transits would likely moderate VLCC flows into Europe and push more barrels onto Suezmaxes through Suez. That, in turn, could reduce the pull of U.S. Gulf crude into Europe and pressure Aframax activity. More USG barrels could instead head East on VLCCs, while a rebound in Black Sea/Mediterranean shipments to Asia would further tighten the Suezmax market.
Overall, the dirty sector faces only a marginal impact — with potential upside for Suezmaxes and a cautionary outlook for Aframaxes, particularly if LR2s re-enter their competitive space.
Geopolitical Stability Still the Swing Factor
Despite recent developments, the situation remains highly volatile. For shipowners, charterers, and insurers, confidence will depend on more than a temporary ceasefire. A durable political settlement may be necessary before Red Sea flows return to historically normal patterns. Until then, markets will continue to navigate uncertainty.
Market Commentary: East of Suez
VLCCs:
The week began quietly during Bahri gatherings, with enquiry limited and freight soft. Midweek, activity surged with around ten AG cargoes circulating. Information flow lagged behind the market, making it difficult to pin down numbers, but sentiment clearly moved in owners’ favour. As the market resets next week, AG/East sits at ws130 and AG/USG at ws67.5.
Suezmaxes:
Firm sentiment persists. A tight list and a strong VLCC market have kept 140 x ws75 for AG/West via Cape within reach, and Eastbound runs remain firm around 130 x ws175 for approved vessels.
Aframaxes (TD14):
Bahri week offered a boost, pushing the route to a year-high at WS171.8. Northbound activity fetched premiums, and with prompt positions tight, owners retain leverage. Indo/Oz currently stands around 80 x ws180.
West Africa
The WAF VLCC market mirrored the strengthening seen in the AG. Enquiry remained modest but availability tightened, supporting rates. WAF/East assessments now sit at ws120.
Suezmaxes remained firm as activity in CPC and Atlantic markets lifted sentiment. Owners are pushing for 130 x ws160 for WAF/UKCM, with reduced East-bound premiums.
Mediterranean
Suezmaxes remained supported, with December programs including 40 stems. Next-done levels likely approach 135 x ws170, and Med/East enquiries continue to absorb tonnage.
Aframax sentiment in the region appeared steady but masked under-the-radar firmness. Some reprieve for charterers may emerge, though surrounding markets remain constructive.
US Gulf & Latin America
VLCCs held firm early in the week and strengthened as enquiry picked up. With limited tonnage and owners resisting last-done levels, USG/East is now around $14.0m and Brazil/East at ws117.5.
North Sea
Despite low activity, underlying confidence persists. Rates briefly touched ws160 before stabilizing within a narrow range. Balanced lists suggest muted volatility ahead.
Clean Products
LRs East of Suez:
Bahri week kept activity discreet, but tight lists should push rates upward once fresh positions emerge.
• LR2s: TC1 at 75 x ws142.5; UKC around $3.9–4.0m
• LR1s: TC5 at 55 x ws147.5; West runs near $3.0m
MRs East of Suez:
Steady under-the-radar fixing.
• TC17: 35 x ws215–220
• TC12: 35 x ws145–150
UK Continent:
MR routes are trading independently with owners selective on options. TA strengthened to 37 x ws130. Weather risks and seasonal demand hint at further gradual firming.
Handies saw early-week firmness at 30 x ws190 before the list replenished. Fresh testing is needed next week.
Mediterranean:
A supportive week for MR and Handy owners.
• MR Med-TA: 37 x ws125
• Handies: XMed last done at ws180, with upside potential
Dirty Products
Handies and MRs had a subdued week with sparse enquiry.
• Med Handies sit near ws180, with potential softening
• UKC MRs expected around ws165–170 next week
• Panamaxes eased from ws210 to ws200, with further softening likely
Rates & Bunkers Snapshot (Nov 13)
Selected highlights:
• TD3C VLCC AG–China: WS129 (+19)
• TD20 Suezmax WAF–UKC: WS157 (-3)
• TC1 LR2 AG–Japan: WS144 (+11)
• Rotterdam VLSFO: $425/tonne (-7)
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Source: Gibson Shipbrokers
