Geopolitical tensions and oil price surges have tightened tanker markets, with VLCC, Suezmax, and Aframax rates poised for upward movement due to shrinking vessel supply and heightened market volatility, reports Fearnpulse.
VLCC
Despite fundamentals suggesting otherwise V-rates were under pressure for the most part in the week gone by. However, recent geopolitical events have changed focus, and still underpinned by a balanced supply/demand picture, will add upward pressure. The front end of the MEG position list of unemployed modern ships free of cargo has shrunk, and tonnage is controlled on fewer hands than seen for some time. Preempting a tightening market, most of the Chinese fleet has been tied up to local Chinese charterers. Oil prices have surged and corresponding bunker prices with it, and owners will seek to be compensated on top of any risk premiums. Many market players have adopted a “wait and see” attitude, but as and when proceedings kick off again in earnest rates could surge exponentially.
Suezmax
With events in the Middle East providing enormous geopolitical uncertainty, the question, as always, is where are rates heading? Coinciding with recent exchanges in the Middle East, the US Gulf appears to have already reacted with other regions surely to follow the trend. With latent volatility being a prized market ingredient, owners are in prime position to take advantage.
Aframax
North Sea market remains an area of limited activity with the natural working window pushing into the 2nd decade of October. With the prospect of production in Libya due to resume and a volatile US market, available vessels for North Sea business will reduce as vessels ballast out of the region for better returns. A thinning position list means freight levels will come under pressure and with some activity and vessels heading out there is potential for further rises.
Owners have drawn a line in the sand of the Mediterranean in anticipation of a return of Libyan production. The tonnage list is still balanced with stable activity in the region, but with the surging USG market already attracting ballasters from West Mediterranean, if supply was to surge, then we might suddenly find ourselves in a tighter position, especially for uncompromised vessels.
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Source: Fearnpulse
