The global crude tanker market is entering a critical transition phase as the order book-to-fleet ratio climbs to a nine-year high. According to BIMCO’s Chief Shipping Analyst Niels Rasmussen, the surge in newbuilding orders may finally trigger long-awaited renewal of an ageing crude tanker fleet. However, future oil demand uncertainties highlight the importance of recycling older vessels rather than expanding overall capacity.
Crude Tanker Orders Surge After Years of Low Contracting
The crude tanker order book/fleet ratio fell to a historic low of just 2.8% in March 2023 due to weak contracting in earlier years. Since then, new orders have accelerated sharply.
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325 crude tankers (68.7m DWT) have been ordered since 2023.
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The order book now stands at 309 ships totalling 65.8m DWT, equal to 14.1% of the current fleet the highest since 2015.
Shipbuilding powerhouses continue to dominate:
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China: 60% of capacity on order
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South Korea: 31%
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Japan: 8%
Deliveries are expected to peak in 2027 with 28.2m DWT, and nearly all new tonnage will be delivered by 2028. Suezmax (135 ships) and VLCCs (128 ships) account for most of the orders.
Fleet Renewal Needed as Oil Demand Outlook Weakens
While the order book looks large, future oil demand growth is expected to slow significantly:
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IEA’s base outlook (2024–2035): Max 0.7% annual growth
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Stated Policies Scenario: Only 0.2% annual growth
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1.5°C Scenario: A sharp 3.3% annual decline in demand
Because growth is uncertain, most new ships must replace older, less efficient vessels. This seems achievable as 18.2% of the fleet is already 20+ years old, representing 17.2% of DWT a recycling pool slightly larger than the order book.
However, Rasmussen warns that over 40% of this recycling potential comes from ships currently under sanctions, complicating their sale and delaying recycling due to restrictions and lower expected scrapping prices.
The crude tanker sector is at a strategic crossroads. A swelling order book suggests momentum toward much-needed fleet renewal, but weak long-term oil demand means that adding tonnage could threaten market balance. If older vessels especially sanctioned ones are recycled in time, the market can maintain equilibrium. Otherwise, the sector risks oversupply at a time when global energy trends are shifting rapidly.
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Source: BIMCO
