Gibson Shipbrokers reports that ongoing peace talks over the Ukraine conflict continue to cast a shadow over tanker markets this week. While there’s potential for long-term change, the market remains finely balanced, and uncertainty still dominates.
Geopolitics at the Core — What Could Change
The report notes renewed international efforts to end the Ukraine war. A U.S. 28-point plan was met with a counter-proposal from Ukraine and the U.S., notably without Russia’s involvement.
If a deal yields sanctions relief, European refiners may resume Russian crude imports. In that scenario, trade flows might gradually shift back toward pre-war patterns. Yet the change is unlikely to fully restore the old trade balance because European refining capacity has fallen since 2022.
For now, the path ahead remains opaque. The pace and shape of any normalization will crucially depend on European policy and how the proposed settlement evolves.
What It Means for Tanker Demand & Vessel Types
According to Gibson, tanker tonne-miles surged in 2022 and 2023, largely due to re-routing caused by sanctions. However, growth slowed to 1% in 2024 and is down ~1% year-to-date — signaling demand softening.
If Russian crude trade resumes under relaxed sanctions, demand for certain tanker types may drop. In particular:
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Smaller crude carriers (like Aframaxes and Suezmaxes), which gained from the previous reshuffle, might see reduced demand.
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Larger tankers (VLCCs) could regain strength — especially if major importers such as India and China continue sourcing crude from non-Russian producers.
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Clean-product tankers (LR2s, MRs) lost much of their wartime boost; especially, LR2 demand may decline if East-to-Europe refined volumes shrink. MRs may fare slightly better, due to versatility and alternative routing options.
Risks from the Shadow Fleet
The report also draws attention to the so-called “dark/grey/illicit fleet”: over 1,200 ships, mostly sanctioned and aged over 15–20 years. Many of these vessels serve sanctioned trades (e.g., Iranian or Venezuelan cargo).
If sanctions are lifted, transitioning these ships into mainstream, compliant trade is unlikely — mainly because of regulatory and reputational risks. For mainstream owners, this raises the possibility of a harder market for older tonnage.
Market Snapshot — Weekly Trends
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VLCC & Suezmax (Crude): Some softening observed in spot rates, particularly where tonnage lists are building. Demand remains patchy as charterers wait for clarity.
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Clean Products Segment: Rates for LR2s and LRs remain under pressure. Demand for East–West refined-products voyages is weak, and many fixture volumes continue to rely on remaining stems.
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Dirty Products / Product Tankers: Some regional variation. In areas with tighter supply or rerouted flows, Handy and MR tonnage remains in demand. But overall sentiment remains cautious pending global clarity.
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Asset Market & Second-hand Values: Tanker asset prices, which rose sharply post-2022, have softened — but remain elevated for many classes (especially VLCCs). However, older tonnage (over ~20 years) still shows a wide gap between market value and scrap value.
Strategic Outlook: What to Watch This Week
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Watch for updates on European policy regarding Russian crude — that could trigger major market shifts.
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Monitor cargo flows from India, China, and other non-European refiners: sustained demand there could support VLCC and long-haul trades.
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Evaluate fleet age and trade-compliance readiness if considering acquisitions or time-charters.
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Track clean-product tankers closely: extra demand may come from alternate routes, but uncertainty remains high.
In the coming weeks, clarity around sanctions and trade flows will likely determine the direction for tanker markets. For owners and charterers, remaining flexible and alert will be key.
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Source: Gibson Shipbrokers
