- Far East and India Maintain Strong Oil Demand While Europe Sees Decline.
- Crude Oil Price Volatility Shapes Global Energy Markets.
- Brent Crude Expected to Reach $75 Per Barrel by Q3 2025.
Bunkered tanker flows from the Arabian Gulf (AG) to major markets in the Far East, India, and Europe have had clear trends influenced by the cycle in crude oil prices and changes in global supply conditions. In India and the Far East, oil supplies were steady through 2024 with consistently strong volumes. However, early reports for 2025 indicate that March was off, indicating possible market disruptions or demand shifts. Despite this decline, the region remains a solid market for AG crude, reports Break Wave Advisors.
Crude Oil Price Volatility and Market Influence
The crude oil market continues to be volatile, led by geopolitical events and changes in supply-demand ratios. As of March 19, 2025, Brent crude oil trades at about $70.88 per barrel, indicating a balance between concerns regarding supply and forecasts of demand.
The U.S. Energy Information Administration (EIA) predicts that the global oil market will remain relatively tight until mid-2025 due to expected reductions in international oil stocks, fueled in part by lower crude output in nations such as Iran and Venezuela. Consequently, Brent crude oil prices are likely to increase to a level of approximately $75 per barrel by Q3 2025.
Regional Strategies Amid Supply Uncertainty
Confronted with possible supply shortages, the Far East, especially China and India, has taken a proactive stance by raising AG crude imports. The move is intended to support reserves and cushion against risks of supply disruptions, highlighting the region’s determination to sustain economic momentum and energy security.
Europe, however, is being more cautious, carefully watching prices and supply fundamentals before entering into significant oil buys. This wait-and-see attitude is in response to fears of economic growth and not wanting to overcommit in a disorderly market.
VLCC and Suezmax Performance
VLCC and Suezmax freight rates have shown strong momentum, particularly on key trading routes.
- VLCC MEG to China rates climbed to WS68, marking a 17% weekly increase.
- Suezmax West Africa to Europe maintained its upward trend at WS100, reflecting an 8% monthly gain.
- Suezmax Baltic-Mediterranean rates rose to WS130, up 16% month-on-month.
Alframax and LR2 Market Movements
Mediterranean Aframax rates dropped below WS115, continuing their decline since the end of February, with a 17% month-to-month drop. Conversely, LR2 freight rates in the AG firmed up, reaching WS165, marking a 30% monthly gain.
Panamax Caribbean-USG rates kept near WS150, with a 25% rise during the month. Freight rates of MR1 in the Baltic-to-Continent stream kept at levels near WS210, an overall 5% weekly up, with even faster momentum this past week. MR2 also gained momentum. Continent-to-USAC rates lifted to WS160, with a 7% weekly lift, while rates MR2 of the US Gulf to the Continent grew to WS120, or by 40% for the week.
Crude Tanker Availability and Market Balance
The availability of crude tankers is still below the annual average for all vessel sizes. Signs of a rise in Aframax tankers on the Mediterranean route, however, have been observed. VLCC availability at Ras Tanura has decreased, with the present ship number at 52, which is 20 ships lower than the yearly average. Suezmax availability in West Africa is also tight, with ship numbers at their lowest point since the beginning of the year.
In Aframax, the Mediterranean route evidenced an increasing trend, although figures are still lower than the annual high. Likewise, the Aframax Baltic number is 22, some 20 ships lower than the high seen in week 45 and lower than the year-to-date average of 30.
Tonne-Day Trends and Market Outlook
The Suezmax market has witnessed a dramatic pickup, leading to hopes of a robust market revival. Nevertheless, the VLCC and Aframax freight markets are still largely dictated by the availability of prompt vessels, with growth in demand continuing to lag in March.
Panamax tonne-days remain below the weekly average for the year, although they do seem to have hit a low eight weeks ago and are slowly converging on the annual average. The MR segment, however, continues to slide, with MR1 vessel tonne-days below the annual benchmark, while MR2 stays close to the annual benchmark but without a recovery signal. The general tone is that although certain market segments are tightening, uncertainty still exists, especially in European crude flows and tanker availability.
Did you subscribe to our daily Newsletter?
It’s Free Click here to Subscribe!
Source: Break Wave Advisors
