Diverging Oil Paths Shape Tanker Trade and Freight Sentiment

By
Mfame Editor
-
18

  • Global oil demand outlook splits sharply between policy-driven and high-consumption futures.
  • Middle East supply growth and shifting refining patterns signal more long-haul crude trade.
  • Freight sentiment is steady but softening in key regions as enquiry fluctuates.

The latest World Energy Outlook lands at a time of political friction, changing energy policies and intensifying climate debate. Three pathways set the tone for future oil consumption:

  • Current Policies Scenario (CPS): assumes no new policy interventions, pushing oil demand up to 105.3 mbd by 2035 and 112.8 mbd by 2050. Growth driven by transport, petrochemicals and continued reliance across emerging economies. 
  • Stated Policies Scenario (STEPS): reflects announced government plans, flattening demand near 100.4 mbd by 2035 and declining to 96.9 mbd by 2050 due to faster electrification and efficiency rules. 
  • Net Zero pathway: purely theoretical — designed around conditions required to hit net-zero by 2050.

Advanced economies continue structural decline, while India and Africa drive consumption gains. China becomes an outlier—peak demand behind it, with electrification cutting oil dependency over the long term.

Production and Refining Realignment

Middle East production anchors future growth in both models, while output in Europe and the Asia Pacific continues to shrink. North America rises to mid-2030s before tapering, especially under STEPS.

Asia leads throughput increases, particularly under CPS.

Europe continues to decline, weighed down by demand weakness and competitive disadvantages.
US refining places under pressure in the faster-transition scenario.
These changes point to more long-haul barrel movement, a trend favourable for crude tanker tonne-miles.

Impact on Tankers: Long-Haul Growth, Mixed Product Picture

This suggests incremental long-haul crude trade regardless of policy speed. However, clean products show divided patterns:

  • Africa and Latin America rely more heavily on imports. 
  • The Middle East and India could retain more barrels, cutting export availability.

This reshapes future CPP flows and trade patterns.

Weekly Market Snapshot

Middle East

The VLCC segment softened through the week with pressure on short runs and charterers pressing for lower levels. Some owners are ballasting toward the Cape, which could relieve front-end supply if the trend continues.

West Africa

Limited enquiry saw another week of steady but muted activity. With tonnage availability rising, charterers are pushing to test downside levels, though resistance may come from stronger Americas demand.

Mediterranean

Aframax levels drift but remain supported by ongoing delays. Expect a quieter window, with charterers seeking sub-$6m marks for longer voyages. Rate benchmarks still need fresh testing.

US Gulf & Latin America

Steady but unspectacular week — sentiment stable and activity gradually improving post-holiday, though it has yet to translate into pricing momentum.

North Sea

Aframax tests set new levels around ws155, and repetition is likely if volumes stay consistent.

Clean Tankers

Activity is modest, tonnage is sufficient, resulting in slight corrections across the board. Rates bottomed in AG MRs with TC17 settling near ws220 and TC12 near ws165. Owners now await mid-December stems before sentiment shifts.

Europe experienced a softening due to limited enquiries and easing weather delays, while Mediterranean volumes remained slow, with the forward outlook dependent on weather disruptions and last-minute cargo planning.

Dirty Products

Handy demand kept lists tight and rates firm in both the North and the Med. MR sentiment improved slightly, particularly in the Med, where testing reached ws185 amid part and full-stem demand.

 

Did you subscribe to our daily Newsletter?

It’s Free — Click here to Subscribe!

Source: GibsonsUK