- Q4 2024 VLCC freight rates on the WAF-Far East route fell to a 14-month low due to weak Chinese demand, OPEC+ production cuts, and oversupply in key loading zones.
- The WAF-UKC route saw a volatile Q4, ending at a 16-month low but rebounding slightly due to increased cargo demand and environmental regulations expected to push rates higher in 2025.
- US sanctions on the dark fleet and rising EU ETS costs are expected to tighten tonnage supply.
The fourth quarter of 2024 marked a challenging period for crude tanker markets, with weaker-than-expected demand and oversupply leading to historically low freight rates for both VLCC and Suezmax segments. While the industry braces for the effects of geopolitical developments and stricter regulations in 2025, market participants hold a mixed outlook for recovery, reports SP Global.
VLCC Market Hits YTD Lows Amid Demand Concerns
The VLCC segment experienced bearish sentiment in Q4 2024, with freight rates on the WAF-Far East route dropping to w45 in mid-December.
Factors such as subdued Chinese demand, OPEC+ cuts, and aging fleets contributed to the downturn.
Geopolitical and Fleet Dynamics Shape 2025 Predictions
Sanctions on the dark fleet could redirect Chinese crude purchases toward conventional suppliers, potentially supporting mainstream VLCC rates.
However, geopolitical tensions, including US-China trade relations, remain a wildcard.
Suezmax Market Recovery Hints at Optimism
Despite ending Q4 at w67 on the WAF-UKC route, increased post-holiday activity and stricter EU ETS regulations are expected to lend support to Suezmax rates in 2025.
Environmental Costs Drive Rate Adjustments
The Mediterranean’s designation as an Emissions Control Area in 2025 and rising EU ETS charges will increase operational costs.
It would potentially lead to higher freight rates globally.
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Source: SP Global
