Crude Clampdown

The EU is considering a major change to its sanctions framework on Russian oil. As reported on the 6th of February, the upcoming 20th sanctions package proposes a full ban on maritime services for Russian crude oil. This would cover shipping, insurance, brokerage, and finance and would fully replace the current price cap mechanism. Under this approach, European shipping companies would be barred from carrying Russian crude regardless of the price at which it is sold. The proposal is limited to crude oil only and does not currently include refined products such as fuel oil or clean petroleum products. UK sanctions are expected to follow the EU’s approach, which would effectively shut Russian crude out of the mainstream tanker market.

Adoption is provisionally targeted for late February but requires unanimous approval. The EU also strongly prefers to align with the G7 before moving ahead with the ban. Internally, Greece and Malta are reported to be the main holdouts, citing concerns over shipping and energy impacts and asking for further clarity on enforcement. On the other hand, some EU member states are concerned that delays to implementation would simply give Russia more time to acquire additional vessels and expand its dark fleet.

For crude tankers, Russia’s dependence on mainstream tonnage is already limited, with the main exposure sitting in the Suezmax segment. If a full maritime services ban is implemented, around ten Aframaxes and roughly fourteen Suezmaxes that typically load Russian crude in Western ports each month would be pushed back into the mainstream market. However, the return of these ships will have an outsized impact as Russian voyages to India and China are much longer than the typical mainstream trades for these size groups.

Timing of actual implementation will be key. Any delays increase the risk that Russia buys more secondhand tonnage, supporting prices for older Aframaxes and Suezmaxes. The upward pressure is already visible, especially for Suezmaxes, where values for 15‑year‑old ships have appreciated by 17.5% over the past six months. Still, operational risks are rising. Recent vessel detentions by the US and France highlight the growing risk of tanker seizures.

Faced with a ban, Russia will continue prioritising shipments from Eastern terminals, which are closest to China and already running at their maximum capacity. Western crude exports could weaken, although much will depend on Russia’s ability to redeploy dark Suezmaxes and potentially VLCCs previously active in Venezuela’s trade. While VLCCs are currently very rarely used for Russian exports, shortages of Aframax and Suezmax tonnage could lead to more ship-to-ship transfers into VLCCs, whether in the North Atlantic, Mediterranean, or even East of Suez.

Trade flows could also feel the impact, particularly as this comes against the backdrop of declining Russian crude sales into India, a trend discussed in our report last week. If the ban is implemented without any delays, it will limit Russia’s ability to redirect these barrels into China at least temporarily. It may also support short‑haul demand into the Middle East for power generation, although these flows are likely to be limited.

As the proposed ban applies to crude only, Russia has a clear incentive to push more product for export instead. That said, gains may be limited by Ukrainian drone attacks on refineries and the EU’s plans to sanction a number of Russian refineries.

On the clean side, Russian product exports are not currently included in the proposed maritime services ban. This is an important distinction. Any move to extend the ban to products would have a much larger impact on tanker markets. Russia relies far more heavily on mainstream tonnage for its product exports, with more than 50% of its shipments carried by mainstream tankers. A maritime services ban targeting these flows would almost certainly reduce export volumes materially. With limited new refining capacity coming online this year, global refining runs increasing by 800kbd and demand growing by 800-900kbd by the most conservative estimates, the global refining system is unlikely to be able to cope with any substantial cut in Russian product supply.

Suezmaxes in Russian crude trade in the West (%)

Crude Oil

East

The AG VLCC market opened the week on a slower footing, with charterers focused on covering remaining February stems. Sentiment held broadly steady, and with IE Week underway in London, some activity appeared to take place under the radar. As the week progressed, a handful of fixtures were reported, though freight rates struggled to gain further momentum. Subsequent deals were concluded at softer levels, placing slight downward pressure on rates and offering charterers improved opportunities. By midweek, fresh enquiry remained limited, and sentiment edged softer as most third decade cargoes were covered. Attention gradually shifted toward early March laycans. Toward the end of the week, enquiries resurfaced, helping stabilise the market, with sentiment steady despite a fair amount of tonnage still available.

The Suezmax market in the East remains firm, with a tight list for prompt dates and an unwillingness from owners to fix short runs due to such high market levels. For Basrah/West via Cape expect owners to be pushing for more than last-done 140 x ws 82.5 with a limited number of vessels keen for this run and a strong West Africa market to consider for those coming from the East. The market for AG/East is due a fresh test but expect owners to be holding for a lot higher than the last reported fixture, we estimate levels to be around 130 x ws 170 for a modern approved ship.

Aframax fundamentals in Asia strengthened this week on the back of rising demand ahead of the upcoming CNY holidays, with fixing dates now rolling into early March. The tonnage list, which began the week balanced, has since trimmed meaningfully due to sustained lightering activity and steady regional demand. Fresh fuel oil enquiry to the north will tighten availability further, allowing owners to cherry-pick employment. While earnings dipped approximately 5% week-on-week to around $45,000/day, a late pre-CNY rush of requirements on Friday suggests a potential rebound into next week. With a shortened trading week ahead, we assess the region steady, closing Indo/Up at 80kt × WS202.5

West Africa

The WAF VLCC market experienced a relatively quiet week, with limited visible activity reported on the surface. Despite the subdued flow of enquiry, freight rates held broadly steady, supported by firmer conditions and activity in neighbouring regions. Owners’ sentiment remained generally positive early in the week, as stability in freight levels helped maintain confidence. However, the lack of fresh fixtures and muted enquiry gradually led to a more cautious tone, with market participants awaiting a clearer test to gauge true levels. The week ends with rates remaining resilient. Although the market remained quiet, freight stayed largely underpinned by activity across the Atlantic, allowing sentiment to close the week balanced.

Suezmaxes in West Africa haven’t been particularly active this week with most cargoes fixed under the radar, though a firm Americas market for the most part of the week has kept TD20 around the 130 x ws 155 mark. Expect next week to see more of the same with perhaps a little bit of a softer feel with more ships opening up around Gibraltar. The premium to head East today is still around 7.5 points, and with a tender due to be awarded on Monday we will see this market tested in early trading next week.

Mediterranean

TD6 has remained steady and last-done continues to be repeated (135 x ws 200) with the number of owners willing to call still largely reduced it isn’t going to take a great deal in terms of the delays in the Turkish Straits to put real pressure on charterers here. Libya/Ningbo hasn’t been the most active this week and really needs a fresh test, the rates reported to the East this week are all options after the fact which seem very unlikely to be utilised. We estimate rates today to be around $7m, with a few players putting their hand up for this run it could potentially test a touch less.

Coming into the week you can be forgiven for picking up mixed signals on Aframaxes in the Med, especially as the disruption of IE week is known for its ability to stall a market. Truth be told, you can never be fully sure how one year will unfold to the next, and this year at least as many of you will attest to, though it didn’t ever stop raining here in London, brighter moments did reflect on the Med Afras.  Suffering an initial dip, a healthy volume of fixing quietly took place behind the scenes. Progressively the tonnage list tightened, with levels bouncing back some 20+ points from the lows, with Ceyhan finding back at WS250.  Furthermore, the short term outlook now reflects favourably once again as persistent drivers for current market dynamics such as weather delays continue to endure with support from surrounding sectors.  

US Gulf/Latin America

The States VLCC market saw a relatively subdued week, with questions being asked but limited activity visible on the surface. Despite the muted flow of fresh enquiry, freight rates remained broadly steady, supported by fixtures concluded earlier in the week. A handful of deals helped maintain stability, particularly as the inflow of natural ballasters into the region remained limited. This kept the tonnage list from building excessively and prevented significant downward pressure on rates. However, much of the fixing activity appeared to take place under the radar. A noticeable number of failed negotiations weighed slightly on sentiment, introducing a more cautious tone toward the end of the week.

North Sea

A bit of a mixed week in the North Sea for Aframaxes with initial market tests showing support for last done levels not quite being in place.  Some downward was seen before stability set back in through a number of mediums, (new restrictions, weather and ballasters heading to the US) have left the market in a firmer place than the start of the week. Levels are sitting at ws190 level for now but owners’ optimism is on the rise heading into next week.  

Crude Tanker Spot Rates (WS)

Clean Products

East

A quieter market on the LRs, somewhat to do with IE week in London but also the approaching Chinese New Year holidays next week. Rates took a bit of a hit accordingly with TC1 for 75,000mt Naphtha AG/Japan down some 30 points at ws170, and TC5 for 55,000mt Naphtha now at ws185. West rates haven’t been tested to the same degree, but we must assume 90,000 mt Jet AG/UKC is now below $4.0 million. LR1s have also seen 60,000 mt Jet AG/UKC move down to $3.0 million and less could be seen on specialist units. We are expecting a very slow start next week and this will surely embolden charterers to hold off and try and put the pressure on. This may not last long though, as recovery could be quick with tonnage in the Far East further out looking thinner. There will be more confidence for March.

A tough week for AG MRs with steady downside pressure as enquiry failed to keep pace with rising vessel supply. The market opened soft with TC17 at ws245, and losses gathered momentum through the week. By mid-week TC17 had slipped to around ws210, with levels now testing / dipping below ws200, marking a drop of roughly 55 points week-on-week. TC12 followed the same trajectory, last reported on subs around ws167.5. Ballast supply remained the dominant driver, moving between 13–19 vessels arriving in the AG before the 25th of Feb, keeping the list comfortably supplied. With limited fresh enquiry, owners were gradually forced to meet the market. Although TC12 earnings moving below TC7 may slow additional eastbound ballasts in the coming days, prompt tonnage remains sufficient to keep sentiment weak.

UK Continent

The weather has continued to drive a very prompt ship itinerary-based MR market with rates seemingly topped out this week. WAF reached a peak of 37 x ws240-235 and with Dangote reportedly back up the bbls from the UKC seem to have slowed. UKC/TA voyages have been slim pickings this week and still coveted by owners eyeing the profitable USG rates. This, however, might now be changing as the rates are looking to have topped out over there as well. Next week will likely see some variety of opinions, however the best earning rates seem to be UKC/Med followed by a voyage back up, or UKC/Red Sea followed by Red Sea/West so the focus does appear to be shifting. One constant that looks to remain are delays due to weather, until that eases we are still in volatile rate territory.    

Overall it has been a positive week for Handy owners in the North with XUKC firming by 30 ws points. Tonnage displacement continues to be the catalyst for this with a good number of units trading down in the MED. Handy owners have been bullish as 30 x ws260 was the highest paid ex North Spain although with the MR market offering little employment opportunities we expect the bigger units to act as a cap for the 30kt clips. 

Med 

In all, it has been a slower week for MRs in the Med. We opened at 37xws162.5 levels on a grade sensitive stem which put Med-TA five points lower at ws157.5. The front end of the list was chipped away throughout the week tightening options for charterers, and this slow pace of play has been enough to hold rates steady at the ws150 level. It seems an options cargo could pull this number up slightly. Also, with USG softer and if this continues to correct down Med-TA rates could be further bolstered by TA runs being less of a draw. The differential for Med-UKC continues to pay up whilst Med-WAF requires a fresh test with this run being largely owner dependent.

A disrupted week for the Handies ends, leaving rates at the lowest they have been for almost a month with 30xws215 on subs and repeated. We started the week around the ws260 mark with grade sensitivity and a tight list helping buoy rates. However, given it has been IE week, fresh information was hard to come by throughout which obscured sentiment slightly as well as business being done directly. Calmer weather allowed for ports to work through backlogs and a general healthier middle section to the tonnage list allowed for charterers to gain a foothold in this market. It must be noted, with some bad weather rolling in again we could see more delays and potential replacements which plays into owners’ hands. Thus, a rate rally is not out of the question come Monday depending on how the list restocks and how much enquiry we see.

Clean Tanker Spot Rates (WS)

Dirty Products

Handy

Handies in the North have continued to strengthen off the back of tight naturally placed positions and a mix of uncertain itineraries basis WMed and an overall strong WMed keeping would be ballasters away from the region. Early on we saw rates firm to WS295 which was quickly repeated before availability for the most part dried up. A handful of replacement jobs and relets heading into programme helped to trim up the list once again. Looking early into next week, we expect to see units working their way up the list, but we think WS300 will be on owners’ minds for the next push upward.

The Med has seen a week of under-the-radar dealings as IE week took place in London. WS300 was tested down too off the back of what looked like a softer market with positions showing off early dates. However, itineraries soon began to slip as bad weather continued to cause disruption. WS305 was repeated multiple times from mid-week to close of play on Friday with some owners eyeing more. Early into next week the bad weather looks to ease WMed before rough seas head east across the Med as the week progresses. Monday mornings list will be an important one for all concerned.

MR

MRs have seen employment opportunities mainly by way of part cargoes this week as the market awaits a well-publicised fresh test in the Mediterranean. Ideas are holding around the WS205-210 mark for now with early supply looking on the tighter side as we move into next week. Up in the North, units here too are thin on the ground with rates looking to be tested upward toward the WS200 level on next done but full stem enquiry so far has been elusive.

Panamax

Panamaxes have seen a quieter week with the expected drop in levels beginning to materialise. TD21 printed at WS367.92 on Friday as a lack of enquiry begins to take its toll. Interest in USG-TA runs has picked up again perhaps signalling owners are keen to lock in higher rates for a longer haul run with anticipation of further softening of regional rates. Over in the UKC and Med workable vessels have stayed scarce with most units heading to the Med for DD, becoming workable again in March. Rates for UKC-USG still hover around the WS170 mark for now but with some availability on the horizon, we expect these ideas to soften in the near future. 

Dirty Product Tanker Spot Rates (WS)

Rates & Bunkers

Clean and Dirty Tanker Spot Market Developments – Spot WS and $/day TCE (a)

wk on wk changeFeb 12thFeb 5thLast Month*FFA Q1
TD3C VLCC AG-China WS-4133137112122
TD3C VLCC AG-China TCE $/day-5,250125,000130,250102,750107,250
TD20 Suezmax WAF-UKC WS4158154166153
TD20 Suezmax WAF-UKC TCE $/day2,75076,25073,50081,25067,750
TD25 Aframax USG-UKC WS21298277249271
TD25 Aframax USG-UKC TCE $/day8,25088,50080,25069,50073,750
TC1 LR2 AG-Japan WS-22168190216 
TC1 LR2 AG-Japan TCE $/day-7,25040,25047,50057,000
TC18 MR USG-Brazil WS-64270334229228
TC18 MR USG-Brazil TCE $/day-11,25036,75048,00029,50027,250
TC5 LR1 AG-Japan WS-25180205227197
TC5 LR1 AG-Japan TCE $/day-6,25030,25036,50042,50032,250
TC7 MR Singapore-EC Aus WS-13220232254226
TC7 MR Singapore-EC Aus TCE $/day-2,25025,00027,25031,50025,000

(a) based on round voyage economics at ‘market’ speed, eco, non-scrubber basis

Bunker Prices ($/tonne)

wk on wk changeFeb 12thFeb 5thLast Month*
Rotterdam VLSFO  +5447442437
Fujairah VLSFO  +19478459444
Singapore VLSFO  +4474470440
Rotterdam LSMGO  -17652669648

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