The global tanker shipping market experienced a busy and volatile first half of 2025, according to Tim Smith of Maritime Strategies International (MSI). A relatively weak start in the first quarter, which saw lower spot and time charter rates, was followed by a sharp but short-lived spike in the second quarter. This volatility was primarily driven by geopolitical events and production changes by OPEC+. Looking ahead to the remainder of 2025, the market’s performance will hinge on the balance between increased oil supply and underlying demand.
Review of the First Half of 2025
The year began with a weaker first quarter, a continuation of a downward trend from the second half of 2024. Spot markets and time charter rates were significantly lower, though not catastrophically so. This was in line with MSI’s forecasts. The market was expected to remain soft in the second quarter, but that changed with two key developments.
First, OPEC+ announced production increases. Second, a brief but intense escalation of conflict in the Middle East led to strikes on Iran by Israel and the US. This event caused the market to go “ballistic,” particularly for VLCCs and large product tankers, as the threat to the Strait of Hormuz created immediate fears of supply disruption. However, the conflict subsided quickly, and so did the market surge, with rates returning to early June levels by the beginning of July.
How Geopolitical Events Impact Forecasts
MSI incorporates geopolitical factors, specifically tensions in the Strait of Hormuz and the Red Sea/Suez Canal, into its forecasting models. These models allow analysts to adjust variables like the availability of the Suez Canal to simulate different scenarios and test market outcomes. While MSI cannot predict future conflicts, they publish a base case and high-probability scenarios to provide a framework for understanding potential impacts.
Outlook for the Second Half of 2025
MSI’s outlook for the second half of the year is shaped by OPEC+’s decision to increase production. The organization raised output by 400,000 barrels per day (bpd) in the second quarter through July and scheduled another 500,000 bpd increase for August. Historically, when OPEC+ has quickly increased supply, it has put downward pressure on oil prices, which can be positive for the tanker market by generating more cargoes.
However, Smith cautions that this scenario depends on strong underlying demand. If increased supply from OPEC+ and North/Latin America leads to an oil oversupply without a corresponding rise in demand, stocks will build up. This could result in an initial rush of cargoes followed by a “hangover” effect, where appetite for more supply weakens and rates eventually decline.
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Source: Seatrade Maritime
