- VLCC Utilisation Hits Highest Level Since 2020.
- Freight Rates Ease Slightly but Remain Near Multi-Year Highs.
- Vessel Availability Tightens Amid Sanctions and Delays.
The dirty tanker market is really picking up steam, fueled by high oil levels in the water, increasing gaps between laden and ballast speeds, and a surge in long-haul shipments heading East. VLCCs are shining bright, leading the charge in this market upswing, reports Break Wave Advisors.
VLCC Utilisation at Five-Year High
VLCC utilisation has shot up to about 57%, the highest it’s been since the floating storage boom back in 2020. Employment remains strong across both sanctioned and non-sanctioned cargoes, showcasing solid market fundamentals underneath.
Freight Rates Ease but Stay Near Multi-Year Highs
VLCC freight rates are still hanging around their highest levels since 2020, even after a recent 20% dip from last week’s peaks. This slight pullback raises some eyebrows about whether the freight rate surge is reaching its limit.
Vessel Availability Tightens
Tanker availability has tightened considerably due to the rising oil levels in the water and increasing discharge delays linked to regulatory and sanction-related issues. New challenges, like USTR measures, China’s Special Port fees, and sanctions affecting Rizhao and Yulong, have further squeezed the available tonnage.
Sanctions to Further Restrict Tonnage
We expect to see the full effects of the latest sanctions on Russian entities after November 21. Longer voyage lengths and more sanctioned tonnage getting tied up will limit availability in compliant markets. There’s a steady shift of vessels moving from mainstream operations into the dark fleet, which is shrinking the pool of eligible ships and is tough to reverse. Meanwhile, buyers of Russian oil are increasingly leaning towards mainstream grades, often involving long-haul trips from the Americas.
Potential Market Shift from 2026
From 2026 onward, dynamics may start to evolve. If Russian crude buyers adjust sharply to sanctions, OPEC+ could curb exports to prevent oversupply and stabilise prices, coinciding with seasonal demand softness in Asia. This could lead to moderated tanker demand, though increased flows from Latin America may support tonne-miles.
Alternatively, if buyers make a lasting shift from Russian to non-Russian barrels, larger vessels would gain structural support at the expense of smaller segments, reshaping demand across the tanker fleet.
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Source: Break Wave Advisors
