Atlantic VLCC activity has surged recently due to eastern buyers seeking discounted crude oil. While this increased activity hasn’t yet significantly impacted freight rates, a tightening vessel supply and a large predicted US Gulf export program for March suggest rates are likely to rise soon, reports Fearnleys.
VLCC
The Middle East Gulf (MEG) tanker market has been comparatively quiet, likely due to Asian players celebrating Lunar New Year rather than a drop in overall demand. The total number of cargoes typically remains consistent month-to-month. Furthermore, vessels ballasting westward in search of better opportunities will limit charterer options in the MEG once activity resumes. Therefore, with limited downside potential, rates in the MEG are expected to rise.
Suezmax
The tanker market remains oversupplied with vessels, except for the Black Sea, which has seen increased activity and slightly higher rates. West Africa rates have fallen to WS 75 due to ample vessel supply and a quiet US market. The US Gulf market has been very quiet with rates holding around WS 65. The Middle East Gulf has seen some activity, but due to previous inactivity and a large vessel list, rates have softened to just above WS 105 East, while Westbound voyages need further assessment.
Aframax
North Sea crude grades are attracting eastward movement, reducing Aframax availability. Combined with relet programming, this has pushed the natural chartering window to mid-February and softened the market slightly. Increased US market activity and potential Libyan port issues are drawing tonnage towards the Transatlantic route instead of the Mediterranean. While the potential Es Sider/Ras Lanuf port closures initially caused negative sentiment, loadings resumed, and rates appear to have bottomed out in the Mediterranean. The Black Sea window is now late February. Although tonnage is currently ample, North Sea and West Mediterranean ballasters heading Transatlantic could reduce vessel availability and firm up the market.
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Source: Fearnleys
