The clean petroleum product (CPP) tanker market is showing signs of stabilization after a period of decline, supported by increasing trade volumes and extended voyage distances, reports Breakwave Advisors.
East of Suez Market Dynamics
In the East of Suez region, the CPP tanker sector has faced challenges due to soft demand, refinery maintenance, and outages, leading to reduced product availability for shipping. However, recent geopolitical tensions and shifting trade patterns have begun to reshape these dynamics. Notably, India and China have increased their procurement of Middle Eastern and Atlantic Basin crude, often utilizing Suezmax tankers when Very Large Crude Carrier (VLCC) availability is constrained. This shift has resulted in a surge in Suezmax liftings from the Middle East Gulf to the West Coast of India, enhancing fleet utilization. Consequently, freight rates for the Middle East Gulf to West Coast India route have risen by 20% to $10.3 per ton (Worldscale 135) between mid and late March.
West of Suez Market Developments
In the West of Suez region, the CPP tanker market is experiencing tightening vessel availability, particularly in the Gulf of Mexico. This trend is attributed to a 50% month-over-month decrease in Aframax tankers ballasting to the Gulf of Mexico and a 67% month-over-month increase in Aframax voyages from the Canadian East Coast in March 2025, with over 70% of these voyages directed towards Europe. These factors have contributed to an uptick in freight rates, with the Gulf of Mexico-to-Europe route (TD25) increasing from $34.5 per ton at the end of February to $41.3 per ton by the end of March.
Outlook
While the CPP tanker market has faced headwinds in recent quarters, current indicators suggest a bottoming out of rates. The combination of increased trade volumes, longer voyage distances, and evolving geopolitical factors is expected to provide support for freight rates in the near term. Additionally, the completion of refinery maintenance schedules may lead to a resurgence in product flows, further bolstering the market.
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Source: Breakwave Advisors
