Extreme Uncertainty

Every year since 2020, as analysts we have complained that the outlook for the market has never been so uncertain. And every year, the level of uncertainty “Trumps” the previous year. 2025 is no different, with so many different factors having the potential to pull the tanker markets in a plethora of different directions. 

US trade/foreign policy has been one of the biggest headaches this year, and a key input into many of the issues mentioned below. The speed of changes, volatility in decision making and backtracking/pausing of measures has made it impossible to accurately predict the impact on oil and tanker demand. Oil (not gas) has largely been exempted from trade measures, whilst the USTR section 301 measures have been diluted sufficiently to a level where the tanker market will be able to largely absorb the measures (see our report here for more insights). On the tariff front, whilst oil is largely exempt, the commodity will suffer from indirect impacts if tariffs are implemented/maintained.

The Global Economic Outlook remains cloudy, with a chance of recession and the prospects largely being impacted by US tariff policy and whether the US and China can find a path forwards. News announced today seems to suggest that both China and the US are preparing to negotiate formally with each other. Whilst a quick resolution is not expected, talks could set the stage for a “normalisation” of trade between the world’s two largest economies.

With the macroeconomic outlook under pressure, Oil Demand expectations have been pared back in recent months. Prior to the tariff announcement, average IEA, EIA and OPEC forecast placed 2025 demand growth at 1.3mbd but following heavy downwards revisions by the IEA and EIA, this now stands at 0.98mbd with OPEC’s still optimistic view skewing the forecast to the upside. Yet, even without economic pressures, Decarbonization (whether you are sceptical or not) is gathering pace in Europe and China, notably. Even without tariffs, Chinese oil demand growth was forecast to grow by just 157kbd this year, as LNG and BEV/PHEV powered vehicles continue to gain market share, whilst European demand was already in decline.

Despite the demand side headwinds, OPEC+ Production increases will accelerate this month, with further increases being mooted for June. Cohesion in the group is also facing renewed pressure. Kazakh production has surged following expansion projects, with the energy minster recently stating that output would be determined by national interests, not OPEC+, whilst other OPEC members have recently indicated they may no longer be willing to “subsidise” other producers through production cuts. 

Yet, oil supply could still be pressured through Sanctions. Whilst the US and Iran are engaging in “direct” talks over Iran’s nuclear programme and possible sanctions relief, the pressure on Iran continues, with Trump last night threatening, without hesitation to impose secondary sanctions on any country or company which imports Iranian oil. If Iranian exports are forced drastically lower, the mainstream tanker market should benefit from increased demand to ship non sanctioned cargoes, perhaps also making space for higher OPEC+ output. If Iranian sanctions are lifted, then the mainstream fleet also benefits as Iranian cargoes return to the international market. 

Despite Trump’s efforts, The War in Ukraine continues to grind on. So far, new sanctions against Russia have been fairly limited under Trump, perhaps to offer goodwill in the negotiation process. But, with this week’s US-Ukraine minerals deal, and Russia’s apparent reluctance to enter into serious negotiations, the strategy could be about to change. Efforts to find a resolution continue, but at his stage the markets are none the wiser as to when the war might end, whether the US will increase or lift sanctions, and how the Europeans might react.

Elsewhere, despite the Americans relentless bombing of the Houthis, Red Sea transits are yet to normalise, whilst the Gaza crisis continues. Clearly the Houthis’ capabilities have been degraded, but it remains unclear when Red Sea transits might return en masse.

Regulation also continues to create uncertainty. Whilst markets are adapting quickly to the introduction of FuelEU and the Mediterranean ECA, which were never expected to be particularly disruptive, the IMO plans to implement a global carbon pricing mechanism from 2028 (to be discussed in next week’s report). Implementing a local scheme for the EU, or other jurisdictions is one thing, but how will such a scheme be globally administered, particularly given the growth in the dark fleet over the past 3 years? 

The factors mentioned are not exhaustive. Relations between China and Taiwan, India and Pakistan, and tensions in the South China Sea, on top of factors which cannot be foreseen all heighten the level of uncertainty. Overall, the current global climate makes it almost impossible to accurately predict outcomes and whilst we can model scenarios on each of the above factors in isolation, it is the timing and combination of factors which creates the biggest headaches.

Oil Demand Growth Forecasts (mbd)

Crude Oil

East

VLCC rates in the AG have been under pressure for most of this week rates have softened as we close out the week. Golden week and May 1st holiday have had a negative impact as the market has been inactive and did not get pre-holiday rush that owners were hoping for. It is not all doom and gloom as we have not touched 3rd decade and there should be at least 10 more stems left to cover for 2nd decade. The tonnage list is currently balanced, but we are yet to reach the bottom of current downward trend, so the beginning of next week will be challenging for owners. However, we would expect things to improve as the East reopens in mid-week.  Today we are calling AG/China WS66 and AG/USG WS35.

Another quiet week in the AG overall with the larger sizes still getting the majority of enquiry for East and West runs. Despite the low levels of enquiry Suezmaxes remain steady overall for runs both East and West. A few replacements did help to keep levels slightly elevated, for now 140 x ws 57.5 via C/C is what we expect a Basrah/Med run to pay, transit via Suez we expect to pay around the WS92.5 mark. Rates to go East haven’t really moved as much as expected and sit around the 130 x WS110 region.

For Aframaxes in Asia, the market corrected downwards for a consecutive week on weaker fundamentals. TD14 dropped another WS5 points to 80 x WS120. Cargoes reported were swiftly covered, with owners taking first counters from charterers reflecting the situation for the Indo region. Surplus regional tonnage with little outstanding requirements leaves sentiment on the softer side. Expect rates to be pressured until participants return to desk from the labour day and Golden week holidays. Despite Aframaxes in the AG seeing little action this week, sentiment swayed in the direction of owners as the list continues to be littered with Gulf of Aden willing tonnage. The soft Indo market will keep a lid on rates but given the lack of ships willing the vanilla TD8 run, owners will be hoping to push AG/East to 80 x WS150 going into next week.

West Africa

VLCC enquiry was limited in WAF this week and sentiment has begun to soften. Owners struggled to find employment for last decade and matters were not helped by the downturn in the AG and overall lack of market activity in adjacent areas. Rates are likely to drop further as we wait for June stems, but charterers are in no rush and feel they are in control. We are calling WAF/East in the region of WS66.5 today.

This week, Suezmaxes in the West African market have seen a negative correction from the midway point as the lack of enquiry and lengthening tonnage list has chipped away at the sentiment in the region. We close the week with a little fresh enquiry with some charterers trying to test the region but at the time of writing this is still not published. TD20 is printing below WS110 but expect it to be closer to the WS100 level come London opening Tuesday.

Mediterranean

More Suezmax owners covered part cargo stems here to keep ships moving as we had a relatively quiet time of it in the Black Sea. We expect the load program here to be condensed slightly, and we imagine charterers will start to look for coverage again on the early side of next week. There have not been as many ships clipped away for WAF business, so the list is still on the longer side here. With limited enquiry and a softer feel in the Atlantic we imagine this market could be tested next week at the 135 x WS130 level. For a long east run owners are not quite ready to book out before the summer period and as such Libya/Ningbo rates today are around the $5.5m mark.

Since suffering a negative correction post Easter, the Med Aframax market has behaved more positively.  Aided by a large proportion of the units in play being rather uncertain on itineraries, owner resilience not only became the decisive factor, but across some positions, also allowed for premium where short flats are being worked to once again be made applicable. Trading around the WS180 area, we finish the week with another disruption of a long weekend. Tuesday now holds the keys to whether this extended period was enough to alter the balance of availability.

US Gulf/Latin America

A positive week for VLCCs in the USG zone as freight rates continue the recent recovery with good volume of cargo and a diminishing amount of available tonnage. There are still reports of some May barrels yet to be covered and charterers are meeting resistance for early June positions. Brazil export was quieter than recent weeks and rates slipped downwards following falls in WAF and East. Today we are calling USG/China $8.90m & Brazil/China WS65.

North Sea

An overtonnaged North Sea Aframax market pressured rates and has been reflected in fixtures. Things look to stabilise somewhat into next week following another short week with several countries off on national holidays. For now, we see the market flat.

Crude Tanker Spot Rates (WS)

Clean Products

East

As golden week continues for LRs in the East the potential quietness owners had feared has been limited. Both the LR1s and LR2s have been active and the front end on both sizes is tight. Although a push on last done levels hasn’t necessarily been realised, owners are positioned well heading into the new week. TC1 busy with many deals at 75 x WS125 should progress upwards next week. UKC circa at $3.55m levels but should also be positively tested. TC5 holding at last done of 55 x WS135, however, given how tight the front end is and if you require a vessel for open sec stem then the larger owners have higher numbers in their sights. West on subs at $2.7m for an ’07 built unit so for a younger ships expect this rate to be close to the $2.8m mark.

UK Continent

The MR Atlantic dynamic has shifted, and with the USG having been weak for a while now the tonnage has displaced in favour of the UKC and Med. This combined with a slow XWAF and WAF export market has seen tonnage arriving at Bishops Rock and Gibraltar from all over the Atlantic. There has been a reasonable flow of cargoes but with the LRs taking the majority of the WAF ums there has not been enough volume for the MRs so the outlook is looking weak.  

General Handy sentiment took a beating this week. The North had been in hold off territory and range bound for many weeks now, but that bubble burst this week. Rates have corrected down and 30 x WS152.5 is the going rate XUKC, Med runs should price at 10 points less, but owners are not that keen to go south at the moment as the summer doldrums have kicked in east of Gibraltar. 

Med 

Charterers take back the upper hand here in this Mediterranean MR sector with a light dusting of cargoes quoted and rates eroded. 37 x WS132.5 is now the last done and with the UKC also sliding unless we see a glut of tricky stems, expect this sentiment to stick. 

A tough week ends for Handy owners here in the Mediterranean with rates under pressure throughout. A broken-up week of bank holidays, power outages as well as the upcoming UK bank holiday, we saw 30 x WS160 slip to 30 x WS135 with little stimulus to hold onto. With the MRs also struggling as well as UKC Handies, expect little optimism ahead.

Clean Tanker Spot Rates (WS)

Dirty Products

Handy

The North started the week in a quiet fashion before a mid-week surge in activity hit causing additional cargoes to flow into the market and tighten up the list. 30 x WS240 repeated multiple times before levels began to rebound and firm up to 30 x WS242.5 by close of play Friday. Looking ahead to next week, we feel that owners will look to press their advantage over a tighter list and look to firm up levels toward the 30 x WS245-247.5 mark early into next week.

The past week in the Med has been another solid week for owners overall. The shorter week for most of Europe followed by a bank holiday on Monday in the UK has brought more cargoes into the market leaving owners bullish. A mix of restricted port cargoes and standard vanilla XMED cargoes have brought a wide range of numbers to the market. Levels as high as 30 x WS262.5 were seen for an x-Italy stem compared to 30 x WS 245 repeats for vanilla XMED cargoes. Rates here are steady but there are doubts among some whether the market has room to run further. There are multiple positions set to make their way up the list given the expectation of a quieter start to the week.

MR

Owners in the North saw the better of the two regions as enquiry surfaced around midweek with a new benchmark set for UKC with the equivalent of 45 x WS165 fixed. Further enquiry followed suit trimming up availability further. Looking ahead to next week, we expect to see next-up owners look to kick on rates towards the 30 x WS 170 mark. It’s not been the week owners in the Med would have hoped for as enquiry struggles to surface leaving part cargoes as the main source of enquiry. Looking to next week, we still expect to see owners look to test upwards but a fresh test here is required.

Panamax

A quiet week for Panamaxes this side of the Atlantic. Rate ideas tick upward, however, mainly off the back of a strong UKC-TA Afra market. TD21 saw a bounce back in rates following enquiry flowing into a tighter list. Owners will be hoping for more of the same as we head into next week.

Dirty Product Tanker Spot Rates (WS)

Rates & Bunkers

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

wk on wk changeMay 1stApr 24thLast Month*FFA Q2
TD3C VLCC AG-China WS-467715462
TD3C VLCC AG-China TCE $/day-4,00053,00057,00037,50041,750
TD20 Suezmax WAF-UKC WS-1110912010594
TD20 Suezmax WAF-UKC TCE $/day-6,75049,00055,75046,75036,750
TD25 Aframax USG-UKC WS-6170176190157
TD25 Aframax USG-UKC TCE $/day-1,50045,25046,75053,00036,250
TC1 LR2 AG-Japan WS-2124127130 
TC1 LR2 AG-Japan TCE $/day-50028,00028,50030,500
TC18 MR USG-Brazil WS12167155156172
TC18 MR USG-Brazil TCE $/day3,00020,75017,75018,25020,000
TC5 LR1 AG-Japan WS-16134150140135
TC5 LR1 AG-Japan TCE $/day-3,75021,00024,75022,75019,000
TC7 MR Singapore-EC Aus WS-3160162177174
TC7 MR Singapore-EC Aus TCE $/day-25016,25016,50019,75017,750

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

Bunker Prices ($/tonne)

wk on wk changeMay 1stApr 24thLast Month*
Rotterdam VLSFO  -31421452434
Fujairah VLSFO  -9473482470
Singapore VLSFO  -13482495479
Rotterdam LSMGO  -45572617588

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