Fourteen Points

After more than three months of disruption, the prospect of the Iran conflict drawing to a close appears higher than ever. The memorandum of understanding (MOU) between Iran and the US, signed twice over the past week, sets out fourteen points charting a path towards normalisation.

In brief, the MOU stipulates an end to hostilities between all parties, including Israel and Lebanon, alongside the lifting of both the US and Iranian blockades, the latter taking into account the removal of technical obstacles and mines. Iran is to receive its frozen funds together with substantial financing and sanctions relief and will in turn refrain from pursuing a nuclear weapon. A comprehensive agreement is to be negotiated within 60 days, a period which is extendable, with the final deal enshrined through a binding resolution of the UN Security Council.

The early signs suggest both sides are honouring the terms. We have seen several Iranian VLCCs and Suezmaxes cross the US blockade this week with their AIS switched on, indicating Washington is holding up its end of the bargain. Similarly, transits through the Strait of Hormuz are increasing, though a return to pre-war volumes within 30 days may prove difficult to achieve. However, cargo availability currently exceeds the willingness of owners to cross the SOH, indicating that for now concerns about transits remain in place.

Transits into Hormuz are expected to build gradually, subject to the security situation continuing to improve, and insurance premiums should ease in line with this. Freight premiums for transits into the Middle East Gulf (MEG), however, are likely to remain volatile. We have observed vessels increasingly positioning nearer to the MEG in recent weeks, particularly VLCCs and LR2s, the segments most dependent on MEG volumes, though it may take two to three months before vessel supply fully normalises.

On the oil supply side, the IEA is optimistic that Middle East crude production can recover swiftly as security normalises. Saudi Arabia and the UAE hold significant spare capacity and could lift output to offset slower recoveries in the likes of Iraq and Kuwait. With the UAE now free from OPEC quotas, the country may look to expand exports rapidly, while Saudi Arabia may continue to lean on Yanbu to limit any bottlenecks at its Gulf loading terminals. The OPEC+ quota policy remains uncertain, yet the group has already lifted quotas by nearly 800kbd between April and July.

The recovery in products will lag behind. Damage to Middle East refineries means runs are unlikely to return to pre-war levels until 2027 at the earliest, while Asian refinery runs will only recover once feedstock supplies have substantially improved, likely in Q4 2026. Refiners may also find themselves competing with government stock building, and refinery exports may be constrained as operators seek to rebuild CPP inventories to normal levels or divert supplies into government storage. Seaborne CPP volumes are therefore unlikely to recover fully until later in 2027, lagging crude volumes considerably.

The US Treasury has reportedly already issued a waiver for exports of Iranian oil and products, valid until all sanctions facing Iran are lifted, yet no official confirmation has been published. It remains unclear, however, whether sanctions relief will be broad enough to allow mainstream buyers back into Iranian oil. Should sanctions be fully lifted, and the EU and UK follow suit, mainstream VLCCs and Suezmaxes in particular stand to benefit. With around 28% of the dark fleet currently engaged in Iranian trade, the prospects for those vessels would be further diminished, and asset prices for older tankers could come under pressure as revenue-generating opportunities narrow.

Overall, the deal appears fragile, and a return to hostilities cannot be ruled out. Israel has continued military operations in Lebanon, with Iran accusing it of violating the MOU terms 84 times since signing. Time will tell whether this marks the genuine beginning of the end, or merely another pause.

Vessel Count in Gulf of Oman (no.)

Crude Oil

East

The AG/Red Sea VLCC market experienced a highly active and event-driven week, with sentiment largely dictated by developments surrounding the Strait of Hormuz. The week began with expectations that the waterway could reopen, although uncertainty over timing and security conditions remained a key influence on owners’ decisions. As a result, many owners were reluctant to commit tonnage, helping rates push steadily higher despite healthy tonnage availability. Activity increased throughout the week, with a growing number of cargoes seeking coverage and several vessels disappearing from the list. By the end of the week, freight had firmed significantly as owners continued to hold back, while market participants focused on how quickly normal transit conditions could resume and whether additional export volumes would emerge.

The Suezmax market is still hanging in the balance pending the outcome of the Iran/USA peace deal. With owners feeling optimistic that the Strait of Hormuz will open, allowing for a frenzy of cargoes in the region, others remain more bearish with considerable uncertainty around whether Israel will cease its activities in Lebanon, causing Iran to keep the strait closed.

Aframaxes in the Indo region improved this week as sentiment continued to strengthen on the back of steady regional demand, resulting in a tighter tonnage list. Rates look poised to move above last-done levels, with TD14 gaining around 8pts over the course of the week, lifting TCEs to just below $30,000/day. The next Australian-bound fixture should provide a clearer indication of prevailing market levels and is likely to set the tone moving forward. Owners are also expected to position for potential AG opportunities amid ongoing developments in the region, although fresh enquiry has yet to materialise according to market participants. With prompt availability tightening and sentiment improving, the market enters next week on a firmer footing. We close the week positive, assessing Indo/Oz at 80 x WS150.

West Africa

The WAF VLCC market started the week on a relatively quiet footing, but underlying fundamentals strengthened as the days progressed. Prompt tonnage remained limited throughout the week, forcing the market to rely on attracting additional ballasters from the East. However, improving opportunities in the Middle East reduced owners’ willingness to ballast west, providing support to freight levels. While visible enquiry remained limited and fresh market tests were scarce, rates continued to firm, supported by tightening tonnage availability and stronger sentiment across both the Atlantic and Middle East markets. The week closed with owners holding a stronger position, although a fresh test will still be required to confirm current levels.

The Suezmax market in West Africa has come to life in the second half of this week, with owners feeling more optimistic and the list being stripped down yesterday, with plenty of vessels being put on subjects. With at least four cargoes outstanding at the time of writing, it seems likely that TD20 will push into the WS170s at any moment. The premium for East is probably around the WS7.5 mark today depending on the type of ship a charterer requires; those who can take something a little older with less approvals may achieve less.

Mediterranean

TD6 has pushed up despite a rather slow start to the week, with a lot of relets being pushed for out-charter. The demand from the Americas, WAF and just general owner sentiment is making things difficult for charterers to achieve last-done levels. Those with more stringent requirements may even exceed the WS222.5 last-done. In the Med we haven’t really seen a great deal of enquiry this week and Med/East via Suez or Cape just hasn’t really been feasible. Rates will remain steady off the back of Americas/WAF/CPC but the activity has been rather minimal on Suezmax for Med-loading.

Inactivity blighted any progress Aframax owners were hoping to make this week; while wider geopolitical issues became a welcome boost to sentiment, fundamentals in the Med failed to offer any underlying support. As such, levels were chipped away at between deals as competition for cargoes played into charterers’ hands. Dipping below WS190 for a benchmark Ceyhan, reductions have been kept to within a narrow margin, however next week is likely to see owners have it all to do again, as negative pressure persists and both the US and UKC remain weak.

US Gulf/Latin America

The States VLCC market began the week with mixed signals after a failed fixture and lower-level deals created uncertainty regarding the true market direction. However, sentiment gradually improved as developments in the Middle East encouraged owners to maintain a firmer stance. Activity remained moderate throughout the week, with South America continuing to generate the majority of visible business. As prompt tonnage availability tightened and freight strengthened in surrounding regions, rates in the Americas found increasing support. By the end of the week, firmer fixtures and rumours of $22m for USG/East helped reinforce positive sentiment, leaving the market in a firm position.

North Sea

The North Sea Afraamx market has suffered from its usual travails this week, a low fixture count and as such a race to the bottom to secure the stems which are needed by strictly local players. A longer voyage to the Baltic started the week at WS140 when previous levels were in the high WS140s and as the week progressed it soon became the conference rate. Surrounding markets have done little to give owners heart in this region, with the States losing ground over the course of the week and the Med performing similarly, and that coupled with thin enquiry is what it took to solidify the recent lows. As we look forward a sea change seems unlikely next week as fundamentals have not changed, but if there is a silver lining for owners the larger sizes are showing signs of life off the back of the AG situation and this sentiment will surely spill over eventually.

Crude Tanker Spot Rates (WS)

Clean Products

East

As expected, a quiet end to the week for LRs as all eyes watch closely to see how the political situation progresses over the weekend. Expect to see fresh enquiry early next week if the situation continues to hold; however, it’s still very much in the early stages and with a lot of uncertainty. There have been nominal stems out of the Red Sea but less activity this week than previously. Everyone continues to hold their breath to see the lay of the land come Monday next week.

A relatively quiet week for MRs in the AG/Red Sea region, with market participants focused on the easing of geopolitical tensions and the anticipated reopening of the Strait of Hormuz. The week began with TC12 fixing at WS200, while some eastbound activity emerged from the Red Sea, including a West Coast India to Singapore voyage at WS240. The standout fixture of the week was a TC17 ex-Ruwais reported on subs at WS550, reflecting the market’s reaction to expectations surrounding the reopening of the Strait. Towards the end of the week, owners largely adopted a wait-and-see approach, holding back tonnage as attention shifted to the volume of cargoes expected to emerge once normal transit resumes. At the time of writing, TC17 ex-Duqm and ex-Sikka are reported on subs at WS295 and WS255 respectively. Looking ahead, the key question remains how much cargo volume will return to the market once the Strait reopens and at what capacity regional refineries will be able to operate. Assuming a meaningful recovery in export activity, rates are expected to firm as fresh AG enquiry enters the market early next week.

UK Continent

MR – The market remains active and is still working in a very prompt fashion; rates have largely traded sideways as earnings are near the bottom of what most are willing to accept. The market in general is overtonnaged due to the west/east displacement factor and whilst we see the odd replacement hot spot we expect rates to continue to grind sideways. The AG factor might draw some tonnage away in the medium term, but there has been no chat of speculative ballasting thus far.

Handy – The larger cubic MRs are causing havoc to Handy owners who continue to try and push rates off the back of a reliably tight list. Whilst the MR situation remains as soft as it is, cargoes will still be quoted on a basis of 30-37kt and unless there is a specific need for a Handy, rates will likely be kept capped until the MR situation changes.

Med

MR – It has been an uneventful week for Med MRs regarding rates as we remain floored at WS140 Med-TA. Tonnage continues to outweigh demand throughout, with a softening TC14 market affecting wider sentiment for 37kt units in the West. Long-haul alternatives such as SAM/WAF/SAF or short-haul cross-Med seem the more economically viable option for willing owners for the time being. Nonetheless, both parties have been eyeing geopolitical developments in the AG and what effect this might have. It is thought that heavier lifters will be the first to migrate East should Hormuz reopen but owners’ over-supply issue would not be entirely solved, meaning we expect this stagnation to continue into next week.

Handy – In all it has been a softer week for Med Handies with rates falling from WS190 levels to WS175. The main story has been a staggered game played by charterers as enquiry has not materialised at the rate needed to work through the list for the most part, thus keeping owners under pressure. However, with a few stems outstanding to end the week we could see rates solidify around WS175, with neither party willing to push too hard this side of the weekend for fear of jumping the gun before next Monday. An influx of end-month enquiry is expected in the near future with owners hopeful this could catalyse some form of rate resistance.

Clean Tanker Spot Rates (WS)

Dirty Products

Handy

The Handy market has seen another week of corrections, with lengthy lists and prompt ships greeting us on Monday. In the North, a reasonably paced start saw levels soften to WS262.5 before quickly correcting down to a low of WS222.5 for an XUKC run. However, under-the-radar activity clipped away a handful of units from the list, causing the market to rebound, with levels now sitting around WS230 for an XUKC run. Momentum struggled to build as enquiry fell quiet toward the end of the week. Sentiment has a steady/soft feel heading into next week, with tonnage working its way up the list over the weekend. Owners will be hoping for a quick start to proceedings to shore up levels.

The Med saw a similar week to the North, with rate ideas starting around WS260 before quickly trending downward due to sluggish enquiry.

MR

MR owners in the North have had little to shout about this week as full-stem enquiry has remained elusive. Tonnage is available both naturally placed and WMed if needed, with rate ideas holding around 45 × WS175–180 for now. These levels could ease further amid a softer Handy market, particularly if enquiry struggles to get off to an active start. In the Med, enquiry this week led to the first fresh test in a good while, with 45 × WS190 tested for an East Med loading. The list still shows healthy availability in the next fixing window, so we expect levels to soften here.

Panamax

Tonnage over Europe has remained thin on the ground for several weeks, with few signs of reinforcements making their way over from the Atlantic basin. Rates need a well-publicised fresh test, but for now ideas sit around WS150–160 for Med and Cont TA runs. TD21 has seen a steady week with rates around 50 × WS215, as tonnage has been clipped away under the radar on a consistent basis. With surrounding markets beginning to firm up, we expect Panamaxes to follow suit and start to tick up here.

Dirty Product Tanker Spot Rates (WS)

Rates & Bunkers

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

wk on wk changeJune 18thJune 11thLast Month*FFA Q2
TD3C VLCC AG-China WS49451402403434
TD3C VLCC AG-China TCE $/day60,000483,500423,500420,000457,500
TD20 Suezmax WAF-UKC WS12170158187200
TD20 Suezmax WAF-UKC TCE $/day9,75078,50068,75084,25091,000
TD25 Aframax USG-UKC WS-33164197225309
TD25 Aframax USG-UKC TCE $/day-10,25033,00043,25051,00081,500
TC1 LR2 AG-Japan WS-9493502530 
TC1 LR2 AG-Japan TCE $/day-1,000142,750143,750150,500
TC18 MR USG-Brazil WS-116209325205377
TC18 MR USG-Brazil TCE $/day-20,25020,75041,00017,00048,250
TC5 LR1 AG-Japan WS-13512524571552
TC5 LR1 AG-Japan TCE $/day-1,250106,500107,750116,750113,250
TC7 MR Singapore-EC Aus WS-17270286324324
TC7 MR Singapore-EC Aus TCE $/day-1,50029,25030,75035,25037,250

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

Bunker Prices ($/tonne)

wk on wk changeJune 18thJune 11thLast Month*
Rotterdam VLSFO  -65571636732
Fujairah VLSFO  +3612291,193907
Singapore VLSFO  -84650735818
Rotterdam LSMGO  -1478701,0171,184

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