- China Merchants Energy Shipping expects a strong VLCC market through 2026 and possibly into 2027–28.
- Demand for compliant modern tankers is tightening as long-haul flows hit record highs.
- Ageing fleets, refinery constraints, and shifting crude trade patterns continue to push freight rates up.
China Merchants Energy Shipping (CMES) believes the supertanker market is entering a prolonged upcycle. Speaking in last week’s investor call, Secretary of the Board Kong Kang said the supply of modern, compliant VLCCs remains too tight to meet demand, supporting rates for at least the next two years.
CMES expects 2026 VLCC earnings to surpass 2025, while 2027 is “unlikely to worsen,” thanks to solid long-haul flows and constrained global refining capacity.
Freight Rates Hit Record Highs
VLCC freight on the Persian Gulf–China route hit an all-time high of w143 in the Previous month. Rates trended higher throughout Q4 as refiners in China and India shifted away from Russian barrels, creating more demand for non-sanctioned tonnage.
Platts data shows:
- Q4 average: w108.6
- 2025 YTD VLCC index (non-scrubber, non-eco): $51,431/day, 60% higher than early 2024
- Seaborne crude volumes: 1.96 billion barrels, an eight-year high.
Kong said tight global refining capacity and China’s limits on product export quotas are adding more support to long-haul demand.
Orderbook Tightness Adds to Momentum
Clarkson’s data cited by CMES shows 41 new VLCC orders placed in the last three months, with Chinese yards fully booked until 2028.
- 319 VLCCs will hit 20 years old by 2029
- Vessels over 18 years are already struggling to secure compliant cargoes because of safety, insurance, and chartering restrictions.
Strong Q4 Activity and Rising Time-Charter Interest
Spot activity has stayed firm across both the Middle East and Atlantic basins.
Last week, 160–165 December-loading VLCC cargoes had already been fixed.
Time-charter demand is also climbing, with multi-year VLCC hires exceeding $60,000/day, a three-year high. Owners, confident in the outlook, remain reluctant to lock in long-term deals.
China’s Crude Imports Continue to Shape Demand
China’s crude imports rose 3.1% year-over-year this year, supporting VLCC employment.
Kong said the focus should be on where the crude is coming from, not just import volumes, as shifts between Middle Eastern, Atlantic, and Russian barrels reshape tonne-mile demand.
Several trends stood out:
- ESPO crude to China fell to a one-and-a-half-year low of 690,000 b/d in November due to higher risks.
- Indian refiners increased buying from West Africa, Brazil, and the Middle East, adding more long-haul voyages.
- Insurance premiums for Russian-linked cargoes have surged to 1% of ship + cargo value ($3 million per VLCC).
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Source: SP Global
