EU keeps the pressure on

Whilst the world’s attention remains firmly focused on Iran, the EU’s 20th sanctions package has perhaps undeservingly received little attention. Yet, the fact that the EU continues to push ahead with further sanctions amid an unprecedented energy crisis is a clear indication that the EU’s stance on Russia remains unchanged.

The latest package includes further restrictive measures across energy, shipping, trade, finance and anti-circumvention. In shipping, the package prohibited the provision of technical assistance, brokering services or financing related to certain icebreakers and LNG tankers linked to Russian trade. 46 additional vessels have been sanctioned, although around half had already been sanctioned by either the US or the UK. The “new” sanctions involved just 1 VLCC, 3 Suezmaxes, 12 Afra/LRs, 2 MRs and 6 small tankers.

Further restrictions have also been introduced on tanker sales. All tanker sales to third countries must now include mandatory contractual clauses prohibiting resale or transfer to Russia. Sellers are also required to conduct risk assessments related to possible retransfer to Russia, implement proportionate mitigation measures, and notify EU authorities upon any sales. In addition, contracts must include an obligation for buyers to pass these restrictions on in any subsequent resale. This could significantly narrow the market for compliant tanker disposals for EU owners, but enforcement mechanisms and related penalties remain unclear.

A new exemption has been introduced to facilitate the recycling of ageing dark fleet vessels. This is significant given that close to 65% of the dark/sanctioned tanker fleet above 25k dwt is now 20 years old or older and these units will have to be demolished at some point in the future. The derogation effectively allows sanctioned vessels to receive the services needed to physically reach recycling yards and be scrapped. However, the latest rules apply only to EU-sanctioned vessels, while many ships are sanctioned by multiple jurisdictions.

Separately, two Russian ports – Murmansk and Tuapse – have been added to the list of sanctioned ports. In another notable development here, the Karimun Oil Terminal in Indonesia has become the first third-country port to be sanctioned for facilitating circumvention of the price cap mechanism. Volumes handled there remain relatively modest. Still, this development potentially opens the door for other third-country ports to face similar restrictions in the future.

Perhaps most importantly, a full ban on maritime services related to Russian crude oil and petroleum products has now been agreed in principle. However, implementation has been deferred, pending coordination with the G7 and the wider Price Cap Coalition. There are two important elements here. Firstly, the proposed ban is not limited to crude oil only, it specifically mentions petroleum products. As discussed in one of our reports, the majority of Russian crude exports are already carried by dark/sanctioned tankers and as such the implications will be limited. The picture, however, is very different for clean trade, where the majority of cargoes are still transported by mainstream tonnage. Here, a full maritime ban could materially reduce Russia’s export capability, at least temporarily, until additional tonnage is brought into the trade.

Of course, tighter rules surrounding tanker sales into Russian trade could reduce the available pool of candidates, but they are unlikely to eliminate them completely given that sizeable fleets remain controlled by owners outside the G7/EU framework. More importantly, the fact that the EU has publicly signalled this measure gives Russia time to prepare. Given the current geopolitical backdrop and ongoing turmoil in oil markets, it appears unlikely that the G7 and wider Price Cap Coalition will reach agreement on implementing a full maritime ban any time soon.

LR2s in Russian clean trade in the West (%)

Crude Oil

East

The AG and Red Sea VLCC market remained heavily influenced by geopolitical tensions throughout the week, restricting visible activity and keeping sentiment cautious. While negotiations between the US and Iran created periods of optimism, uncertainty around the region continued to limit normal trading patterns. Much of the activity appeared to take place under the radar, with some Fujairah loadings and vessels reported on subs gradually trimming the tonnage list. Despite this, freight softened slightly as the pace of visible fixing remained insufficient to build real momentum, with few deals reported failing in the region. The week closed on a quieter note, with owners hoping for a clearer return of enquiry next week to test sentiment properly.

Geopolitical uncertainty continues to dominate the Suezmax AG market, though underlying activity remains limited. Owners are largely keeping vessels in the region awaiting further developments, contributing to a growing list and softer sentiment. With enquiry still subdued, the market remains case by case.

The Asia Aframax market remained subdued this week, weighed down by softer Q2 demand. While regional lightering activity and a handful of long-haul cargoes helped trim the list, the lack of sustained enquiry over recent weeks has pressured earnings, with TD14 TCEs slipping below $50,000/day. Near-term sentiment points to further downside, though elevated bunker prices should offer some support, allowing owners to resist sharper corrections in freight. We close the week on a softer note, assessing Indo/Up at 80kt × WS230.

West Africa

The WAF VLCC market started the week quietly, with owners looking to build momentum through increased enquiry. Activity remained limited early on, though sentiment held broadly steady as rates stayed largely unchanged. Mid-week brought some rumours of outstanding cargoes and a brief pickup in activity, but not enough to shift the market meaningfully in owners’ favour. Toward the end of the week enquiry improved slightly, though freight failed to respond materially. Overall sentiment remains broadly sideways, with a degree of caution warranted given the relatively limited prompt options.

The West African Suezmax market started under pressure this week, weighed down by continued Eastern ballasters and political uncertainty. USG and Guyana activity provided some support, though overall sentiment stayed weak as tonnage continued to build. A brief burst of activity mid-week ex-WAF tightened prompt availability and pushed TD20 back toward WS200, though gains appeared short-lived with underlying fundamentals still soft.

Mediterranean

The CPC Suezmax market started the week relatively stable, though sentiment softened slightly toward the end as the June programme has yet to fully materialise. Prompt tonnage remained tight initially, supporting rates, though safe positions grew as the week progressed, helping to soften ideas. With enquiry slowing and charterers showing increased resistance at current levels, the market may see further testing unless June activity improves in the near term.

Coming into the week the Med Aframax market was facing an oversupply shock, with front-end units stacking up on the lists. Coinciding with a lack of support from surrounding markets, charterers seized the opportunity to correct levels down, settling in the WS180s at time of writing though still in need of a public test. That said, there is some optimism at the final turns of the hour glass, with under-the-radar activity helping to take out some of the length and a slight US rebound boosting sentiment that perhaps we are nearing the floor in this cycle.

US Gulf/Latin America

The States VLCC market saw a more constructive week, with cargoes gradually drip-fed into the market and rates edging higher early on. Owners’ sentiment remained firm as activity supported levels, though momentum never fully accelerated. Later in the week fixtures began to emerge below last done, softening sentiment slightly and limiting further upside. Even so, the tonnage list has gradually tightened, and rumours of fresh cargoes working suggest the market could turn quickly if enquiry improves. The week closes with freight broadly stable around recent levels, with owners watching closely for stronger momentum next week.

North Sea

Despite some syphoning off of vessels to the States, local Aframax markets have taken a hit. Most action has been covered by relets and programming, with little getting kicked into the market. Sentiment has taken something of a pounding, with most views skewing bearish without a great deal coming to fruition — a story that tells itself. Longer-term questions remain on hold, with where this market settles still up in the air. Levels sitting in the mid-WS180s for now. We are not out of the woods yet, and next week will see further erosion on the near side.

Crude Tanker Spot Rates (WS)

Clean Products

East

A very quiet week for LR2s and LR1s, resulting in a negative correction. LR1s have seen a circa 40-point drop on TC5, last at 55 × WS235, albeit only to be released as the stem went on passage. LR2s have seen no cargoes all week, and with both tonnage lists building — compromised and non-compromised units alike — stems that do enter the market will be keenly fought over. The AG remains unchanged, and owners will be hoping next week brings cargoes from WCI, Red Sea and the Sohar-Duqm range after an exceptionally quiet week.

A relatively quiet week for Middle East MRs, as ongoing disruption around the Strait of Hormuz continued to limit overall cargo volume while a gradual build-up of available tonnage added downward pressure on sentiment. TC17 started the week around WS410 ex-Sikka before easing to WS350 by week’s end, a drop of around 60 points. Pressure was also seen across other routes, with TC12 trading around WS315 early in the week. On short-haul runs, New Mangalore/Sohar was reported at around $1.24m. Westbound activity out of the Red Sea remained limited, though a handful of cargoes got on subs, with UKC discharge reportedly trading below the $2.5m mark. With the list continuing to build and fresh cargo volume remaining thin, the market remains under pressure, and it is still unclear whether rates have reached the bottom or whether further downside lies ahead.

UK Continent

The front end remains date-sensitive on the MRs and has in fact been tight for around four months now, though with the USG vacuum persisting we expect ballasters from the South Atlantic, WAF, Brazil, USAC and ECC to head toward Bishops Rock and the Rock of Gibraltar. This forward tonnage overhang is leading to a softer sentiment going forward, which has seen all rates off the UKC soften this week. The key question going forward is what the likely floor will be, as bunker inflation has been rampant and lower earnings are expected to collide with opex at a much higher base rate than seen so far in 2025. As before, flat price will dictate how low this goes, with tonnage displacement now favouring the Atlantic — a dynamic that this week’s USG rates have highlighted clearly.

A uninspiring week for Handies in the North, with the pace of fixing a concern for owners and levels softening to 30 × WS310 XUKC. Next done for UKC/Med should land at 30 × WS300 when tested. The weekend break and replenishment will do little to help owners here, and unless enquiry levels improve further softening could be on the cards in the short term.

Med

A fluctuating week for Med MRs, with a small spread on rates. There was a general uptick in enquiry, with the majority of owners opting to go short as it offered better returns. However, as TC14 softened as the week progressed, owners needed to reassess their round-trip economics, which led to some rate resilience on Med-TA runs that had previously been discounted. Last done sits at 37 × WS212.5 Med-TA, though both parties will be watching what effect inbound ballast tonnage could have. Despite the episodic pickup in enquiry over the last two weeks, volumes are thought to be low and reassessments could be around the corner. Med-WAF remains softer as the differential narrows and the route attracts more interest.

In all it has been another softer week for Med Handies, with rates correcting down to 30 × WS315 and repeated. Whilst the week has been active, charterers have done well to keep fixtures off-market, which has fed bearish sentiment and been supported by the list, with charterers seemingly under little pressure. Now that the majority of tonnage has been taken out, owners are at the mercy of the weekend restock, and if a healthy list materialises come Monday we expect current trends to continue. Owners will be hopeful that some fresh end-month enquiry early in the week can act as a catalyst for resistance to the current soft sentiment.

Clean Tanker Spot Rates (WS)

Dirty Products

Handy

The North saw a softening of levels this week, with sharper rates reported across the board. WS420 was reported for a prompt stem out of Northern Spain on a prompt ship, marking a good deal for both parties, though this then set the tone with charterers looking to repeat the same or close to it. The list continued to tick over with a handful of ships clipped away as the week progressed. TD18 hovered around the WS430-432.5 mark before slowly slipping to WS431.25 on Friday, reflecting the growing softer sentiment. Looking ahead, we expect to see a good number of ships workable for standard and non-restricted cargoes, though owners may well choose to resist, as we saw in the Med this week.

The Med saw an active start to the week, with a widely quoted cargo fetching WS427.5 and marking a softening below WS430 for the first time in a good couple of weeks. However, a prompt cargo and a premium for a good lifter both fetched WS437.5 on the same day, allowing owners to push levels back beyond WS430, with WS435 repeating multiple times. The market experienced a quieter end to the week with Europe off on Thursday and additional holidays on Friday. We expect to see some additional tonnage ready to work at the start of next week.

MR

A quiet week for Med MRs with little to report in terms of full-stem activity, with owners instead finding employment in the Handy market. Units look well-balanced on the list as things stand, though a fresh test is needed to determine levels here. We expect next done to fall between WS335-340. Availability showed itself in the North, with charterers left with options, and as expected tonnage was clipped away quickly at softer levels with WS325 the new benchmark. Looking to next week, a handful of options are expected to be ready to work, though full-stem enquiries will need to surface quickly for owners before rates come under pressure again.

Panamax

Panamaxes in Europe remain quiet, with the next-up tonnage needing to drydock in the Med, leaving few options but to look at alternative sizing for now. With local Aframaxes and TD21 under pressure and softening, we expect rate ideas to be tested down toward the WS190-200 mark. Over in the USG and Caribs, another week of softening levels as tonnage continues to pile up and enquiry struggles to surface at a pace sufficient to make a dent in supply. As a result, levels have tumbled toward the WS300 mark, with the bottom not yet in sight. Owners will be hoping for a turnaround early next week.

MR

Panamax

Dirty Product Tanker Spot Rates (WS)

Rates & Bunkers

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

	wk on wk change	May 14th	May 7th	Last Month*	FFA Q2
TD3C VLCC AG-China WS	-11	448	459	467	434
TD3C VLCC AG-China TCE $/day	-13,750	471,500	485,250	498,000	447,500
TD20 Suezmax WAF-UKC WS	0	195	196	192	209
TD20 Suezmax WAF-UKC TCE $/day	250	88,500	88,250	89,250	89,500
TD25 Aframax USG-UKC WS	-56	237	292	346	351
TD25 Aframax USG-UKC TCE $/day	-20,750	54,250	75,000	98,000	90,750
TC1 LR2 AG-Japan WS	-3	547	551	589
TC1 LR2 AG-Japan TCE $/day	-1,250	156,000	157,250	173,000
TC18 MR USG-Brazil WS	-104	211	315	659	383
TC18 MR USG-Brazil TCE $/day	-19,250	17,750	37,000	98,500	45,500
TC5 LR1 AG-Japan WS	-3	601	604	621	432
TC5 LR1 AG-Japan TCE $/day	-750	124,000	124,750	131,500	79,500
TC7 MR Singapore-EC Aus WS	-14	341	355	380	304
TC7 MR Singapore-EC Aus TCE $/day	-2,500	38,000	40,500	46,750	30,500

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

Bunker Prices ($/tonne)

	wk on wk change	May 14th	May 7th	Last Month*
Rotterdam VLSFO	-50	750	801	645
Fujairah VLSFO	-62	876	938	726
Singapore VLSFO	+3	828	825	757
Rotterdam LSMGO	+47	1205	1,159	1,222

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EU keeps the pressure on