After a period of subdued earnings, the Very Large Crude Carrier (VLCC) sector has reemerged as a focal point in the tanker freight markets, reports Breakwave Advisors.
Sharp increase in crude exports from the Middle East
In September 2025, spot charter rates for certain VLCC routes have surged toward USD 100,000 per day, putting owners back in a favorable position and placing charterers under pressure to secure tonnage at competitive terms.
At the heart of the rally lies a sharp increase in crude exports from the Middle East. Production levels under OPEC+ have pushed shipments beyond 18 million barrels per day, creating sustained demand for long-haul voyages primarily bound for Asia. Compounding this, cargoes originating from the U.S. Gulf, Brazil, and West Africa are increasingly routed to Asia, tying up vessels on extended voyages and tightening fleet availability.
China continues to play a pivotal role—despite relatively modest domestic demand growth, it remains active in building strategic inventories when crude prices are favorable. Such storage-driven imports often involve long distances, further boosting VLCC utilization. Simultaneously, shifts by other major crude importers away from certain supply sources have led to greater reliance on Middle Eastern and transoceanic cargo flows, increasing the demand mix for VLCC tonnage over smaller classes of tankers.
On the supply side, the fleet faces constraints. New VLCC deliveries have been historically low—only one vessel entered service in 2024, and just two more in the current year. This stagnation in capacity growth strengthens the supply-demand imbalance. Moreover, vessels equipped with scrubber systems are commanding significant premium rates thanks to their operational efficiencies under fuel emission rules.
Yet, the current strength is not without risks. A portion of the global VLCC fleet has been sidelined by international sanctions, reducing open-market availability. New regulations slated for October 2025 will also impose steep fees on certain vessels calling at U.S. ports, prompting repositioning efforts and potential inefficiencies. Looking ahead, planned deliveries in 2026 and a potential drop in China’s storage demand could alleviate current tightness.
For now, albeit potentially short-lived, the alignment of high exports, limited fleet growth, and storage-based demand has put VLCCs back in the limelight. September 2025 may come to be seen as a turning point — or at least a vivid demonstration of how quickly tanker markets can pivot when multiple key drivers converge.
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Source: Breakwave Advisors
