Following a decline in the second half of 2024, global VLCC demand has recovered, with utilization rates exceeding 50% since the beginning of 2025, reports Breakwave Advisors.
Diesel and Jet Fuel Shipments
Diesel and jet fuel shipments through the Red Sea are showing a recent increase, particularly from India.
- Indian voyages, along with those from the Middle East Gulf, increased in February, with India showing a significant month-over-month rise.
- These voyages are being conducted by less risk-averse shipowners, who did not stop transiting the Bab-el Mandeb strait during the Houthi attacks.
- Other major Middle Eastern exporters, like Saudi Arabia, the UAE, and Qatar, have been more cautious in increasing Red Sea shipments.
- Saudi Arabia’s Red Sea refineries allow it to reduce the need to send shipments from its Jubail refineries through the Bab-el-Mandeb strait.
- Despite the recent uptick, total Red Sea voyages remain significantly below pre-2024 levels.
- Rising tensions between Israel and Palestine could lead to a resurgence of Houthi attacks on Western and Israeli-linked vessels.
License Revocation
Chevron is expected to cease its Venezuelan crude oil production by early April due to the revocation of its license.
- Since the U.S. waiver for Venezuelan crude ended in May 2024, 18 Aframax vessels have been involved in this trade, averaging 12 monthly voyages to the U.S.
- These Aframax vessels are now seeking alternative employment in regions like the U.S. Gulf, the Mediterranean, and Northwest Europe, leading to longer voyages and potentially increasing vessel supply in those areas.
- Even with the license revocation, some vessels are still heading to Venezuela.
- In April, Venezuela’s crude exports are anticipated to shift to VLCCs for longer-distance transport, especially to Asia.
- Given the limited availability of “dark fleet” vessels, mainstream VLCCs might begin participating in these trades.
MR Employment
MR tanker employment for carrying clean petroleum products (CPP) from Russia has decreased by 30% in February compared to January, continuing a downward trend since late 2024.
- This decline reflects a decrease in Russian oil exports (excluding diesel) by approximately 500,000 barrels per day year-on-year.
- Russian CPP exports, particularly from Black Sea ports, have significantly reduced due to refinery maintenance and drone-related disruptions in southern Russia.
This reduced supply has led MR tankers to reposition, especially from the Black Sea to the Mediterranean, to serve the European CPP trade.
- MR tanker availability in Europe has increased sharply since early March, intensifying competition for mainstream cargoes in Northwest Europe and the Mediterranean.
- However, CPP loadings in Europe are leveling off due to refinery maintenance and high winter domestic consumption.
As a result, a quick rebound in MR tanker employment from this repositioning is improbable in the near term.
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Source: Breakwave Advisors
