Tanker Market In Unfamiliar Equilibrium As Demand Levels Stay ‘Higher For Longer’

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Latest MSI analysis finds ‘distance effect’ is among factors supporting deadweight demand for crude and product tankers. Large scale route diversions as a result of the Red Sea/Suez Canal crisis have seen deadweight demand for crude and product tankers increase by 5.5% and 4.5% respectively in 2024.

Unfamiliar equilibrium

In its Q2 2024 report, MSI finds that the market is currently in an unfamiliar equilibrium after two years of extreme volatility. This has been supported by wider stability in oil markets and falling vessel deliveries.

The duration of the Suez Canal disruptions remains a major uncertainty in forward analysis. MSI foresees conditions in the Red Sea normalizing in 2026, assuming a reversal in the escalation of conflict in the Middle East.

High risk conditions 

However if the conflict is not resolved, an extension of high-risk conditions will naturally drive tanker demand and earnings even higher. Under the MSI Base Case the expectation is that demand growth slows dramatically in 2025 and 2026.

Overall demand levels are being elevated. Other factors, such as long-haul crude trade from Americas to Asia are countering the ‘loss’ of the Red Sea/Suez Canal diversion effect in 2025.

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Source: Ship management