Global Tanker Market Struggles as Dirty Freight Rates Plummet

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Mfame Editor
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  • The availability of VLCC tankers (spot/relet and contract) has decreased since October 2024.
  • Weakness in VLCC, Suezmax, and Aframax freight rates highlights ongoing struggles in the dirty tanker market.
  • Despite modest gains in crude oil prices and robust heating fuel demand, the freight market remains fragile.

This week’s report highlights a sluggish start to 2025 for the global tanker market, particularly in the dirty tanker segment. While crude oil prices have shown consistent gains, reflecting strong heating fuel demand, freight rates for most tanker categories have declined. The market continues to grapple with reduced vessel employment and uncertainty fueled by geopolitical and seasonal factors, reports Breakwave Advisors .

VLCC Supply Faces Persistent Decline

The VLCC supply in the Arabian Gulf (AG) market has dropped significantly compared to the highs of October 2024.

Spot relet activity remains subdued, with Baltic rates underperforming, signaling weak momentum in the dirty freight market.

Dirty Freight Market Sees Broad-Based Weakness

Freight rates for VLCCs, Suezmax, and Aframax tankers have shown sharp declines:

  1. VLCC MEG-China rates dropped to 47 WS, marking a 30% year-over-year decline.
  2. Suezmax West Africa-Europe and Baltic-Mediterranean routes fell by 28% and 48%, respectively.
  3. Aframax Mediterranean rates plunged 47% year-over-year, reaching WS 98.

Clean Tanker Segments Show Mixed Signals

While the dirty tanker market struggles, clean tanker rates show some resilience:

  1. LR2 AG rates increased by 13% compared to last year, reaching WS 130.
  2. Panamax Carib-US Gulf rates remained stable but showed a 40% decline from last year.

Crude Oil Prices Offer a Glimmer of Hope

Crude oil prices marked their third consecutive week of gains, driven by robust heating fuel demand.

JP Morgan estimates a year-over-year increase of 1.6 million barrels per day in global oil demand during Q1 2025, which could potentially revive tanker market momentum.

Tonne Days and Vessel Counts Reflect a Fragile Market

Dirty tonne days exhibited a declining growth trend across all vessel categories, falling below the annual average. Segment highlights include:

  1. Aframax Mediterranean vessel count dropped below annual averages, showing a steady decline.
  2. Suezmax West Africa vessel count rose above the average, signaling growth potential.
  3. Clean MR activity in Algeria’s Skikda port showed a rise to 43 vessels, above the annual average of 30.

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Source: Breakwave Advisors