At the end of the third week of May 2025, the persistent downward pressure on VLCC (Very Large Crude Carrier) freight market sentiment on the Arabian Gulf (AG) to China route can be attributed to a confluence of factors, primarily stemming from weakened demand and an ample supply of vessels, reports AJOT.
Freight Market
The crude oil tanker freight market is currently exhibiting a mixed performance across different segments and routes.
VLCCs (Very Large Crude Carriers):
- Freight rates on the Middle East Gulf (MEG) to China route dropped to WS 60. While this represents a decline in overall momentum, the provided text also states it reflects a 4% weekly increase, suggesting a slight rebound within a broader weakening trend or a specific point-in-time calculation that shows a weekly gain.
Suezmaxes:
- Rates for West Africa to continental Europe voyages dropped below WS 80, indicating a 10% weekly decrease.
- Rates on the Baltic–Mediterranean route fell below WS 110, standing 20% lower than a month ago.
Aframaxes:
- In contrast to the larger crude segments, Aframax freight rates in the Mediterranean showed signs of rebound, reaching WS 130. This reflects a 10% weekly increase.
Product Tankers (LR2 and Panamax):
- LR2 (Long Range 2) freight rates from the Arabian Gulf (AG) rose to WS 155, marking a 20% monthly increase.
- Panamax Carib-to-USG (Caribbean to US Gulf) rates decreased to WS 170, indicating a weakening trend from the prior week. This level is also 15% lower than the rates seen a month ago.
Divergent Trends
The tanker market’s vessel count for May 2025 shows divergent trends across different segments and regions.
In the dirty tanker segments (crude oil carriers):
- VLCC Ras Tanura: The upward pressure on vessel count observed in the first two decades of May appears to be decelerating, with current levels around 75 vessels. The market is watching whether a slowdown in demand growth (measured in tonne-days) will further accelerate the increase in vessel count for the remainder of the month.
- Suezmax West Africa (Wafr): After a spike two weeks ago, the current ship count has begun to decelerate and is now nearing the annual trend again. The last time levels were floating below the annual trend was at the end of week 15.
- Aframax Med: The ongoing decline in vessel count continues, with the current figure remaining significantly below the annual benchmark of 10.
- Aframax Baltic: The current number of ships stands at approximately 21, representing a decrease of nearly 10 vessels compared to the annual trend for this region. This indicates a tightening of supply in the Baltic.
In the clean tanker segments (product carriers):
- Clean LR2 AG Jubail: The number of vessels in the third decade of May has seen a significant decrease, falling 37% below the average trend. This suggests a tightening of available LR2 tonnage in the Arabian Gulf.
- Clean MR Skikda, Algeria: This region continued the downward trend of the previous week, reaching 31 vessels, which is 5 lower than the prior week.
- Clean MR Amsterdam: In contrast, MR2 vessels in Amsterdam have remained above the annual average of 32 for a sixth consecutive week, confirming a sustained increase in vessel availability throughout May.
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Source: AJOT
