Fragile Hiatus

The two-week ceasefire announced on April 7 between the US and Iran has introduced a flicker of optimism, though the reality remains fraught with risk. There are conflicting messages from the White House, confusion surrounding Lebanon, the terms of the Strait of Hormuz reopening, and President Trump’s willingness to cooperate on the removal of nuclear materials as a de-escalation measure, which appears to be a unilateral US proposal rather than a settled term of the truce. The ceasefire is better viewed as a tenuous, high-stakes diplomatic window rather than a definitive step toward normalization. High-level diplomacy is currently being undermined by intense Israeli military activity in Lebanon, which Tehran cites as a breach of the deal’s spirit.

In the immediate term, the reopening of the Strait of Hormuz remains stalled. Despite the announcement, tanker movements are still highly restricted; vessels attempting to transit are being stopped due to what Iran characterizes as Israel’s ceasefire violations. The situation on the ground remains tense. Shortly after the ceasefire agreement was reached, Iranian strikes on the 7 mbd Saudi East-West pipeline resulted in a 700 kbd capacity cut, a stark reminder that regional hostilities have not subsided. There were also reports of an attack on the Lavan Island oil refinery, while Kuwait confirmed significant damage to critical infrastructure and the UAE reported intercepting missile threats. The overall regional uncertainty is further compounded by the latest Houthi statement, suggesting actions could escalate depending on developments on the ground.

The freight market has reacted sharply. Baltic VLCC rates on the TD3C route jumped by over WS140 on 8 April on the news, though they have since retreated as the fragility of the truce became apparent. Owners remain deeply cautious, awaiting clarity on security arrangements and insurance cover for transits. Tehran added a further significant layer of complexity by proposing a $1/bbl transit fee payable in cryptocurrency. For now, any payment to Iranian authorities would likely violate US and international sanctions, creating a “catch-22” for both charterers and owners.

Still, at least part of the market believes a resolution may be within reach, as the US delegation heads to Islamabad and Israel signals negotiations with Lebanon. Oil prices have corrected sharply down on the news of the ceasefire and, although they have edged up more recently, they remain well below the highs seen over the past several weeks. If the ceasefire holds, laden tankers in the Gulf are likely to move first, with some vessels attempting to enter in ballast. However, initially this could be a trickle rather than a flood. Freight for voyages out of the Gulf and the Red Sea will continue to command a significant premium due to obvious security concerns. Recent weeks have also seen a notable increase in VLCC and clean tanker ballasters heading west across all segments, which has reduced tonnage availability in the east. The flip side, however, is that this could weigh on freight in the Atlantic Basin, with VLCCs and LRs most exposed.
In the longer run, even if a permanent resolution is reached, the scars from recent events will linger. Given the scale of attacks on energy assets across the region and largely unknown repair timelines, it will take time for export volumes to recover. Some economic damage has already occurred, and demand may shift more permanently away from oil, with an even stronger focus on energy diversification. Still, any lasting deal would likely involve some degree of sanctions relief, benefitting mainstream VLCCs and Suezmaxes, but the outlook for clean tankers remains less clear, especially amid a growing wave of newbuilding deliveries.

Tanker/Chem transits through Strait of Hormuz (no.)

Crude Oil

East

The AG and Red Sea VLCC market began the week quietly, with little fresh activity and ongoing uncertainty surrounding the Strait of Hormuz. Momentum picked up mid-week as increased enquiry emerged, driven in part by geopolitical developments, including Trump’s peace agreement, which encouraged charterers to quote more cargoes out of the AG. This brief surge in activity raised expectations that prompt tonnage availability would tighten; however, the pace of enquiry slowed shortly after, leaving the tonnage list relatively healthy for natural dates. As the week progressed the market lost steam again, ending on a subdued note despite the announcement of a ceasefire. Overall sentiment remains cautious, with the political situation in the Middle East continuing to cloud the outlook, and market participants now focusing on the upcoming second round of talks.

Suezmaxes in the East are lacking clear direction, with ongoing ceasefire talks injecting a high degree of uncertainty into the market. Owners remain in a constant state of reassessment when considering entry into the region, limiting conviction on both sides. While cargo flow remains, it lacks urgency, with true tests on where levels stand remaining simply case by case.

Indo Aframaxes ended the week busier than they began, with charterers working largely under the radar against a highly date-sensitive list. Positions tightened significantly as a result, with momentum feeding into TD14, which printed around 80kt × WS250, pushing earnings toward $60,000/day. The West continues to draw tonnage and bolster owners’ confidence in achieving comparable returns, with TMX owner ideas now north of the mid-$6m mark. With cargoes still outstanding, these will likely set the pace into next week. However, as bunker prices ease on the back of softer oil, charterers may begin to resist further gains. The market closes on a firm footing, with Indo/North assessed at 80kt × WS265.

West Africa

The WAF VLCC market remained subdued throughout the week, with minimal visible activity and limited enquiry reported. Freight rates declined gradually, primarily due to an expanding tonnage list as ballasters from the East continued to enter the region on the back of weaker opportunities in the AG and Yanbu. Although there were indications of some discreet fixing activity, this proved insufficient to generate any sustained momentum. Sentiment remained soft, charterers were largely inactive, and a fresh market test will be required to more accurately determine prevailing rate levels.

WAF Suezmaxes have rolled over quickly, losing their previous momentum as the tonnage list opens up and charterers push back. TD20 has corrected to WS285, with further downside still in play. More ballasters and better optionality are weighing on forward fixing.

Mediterranean

On Suezmaxes, CPC is starting to come off as well. While still relatively elevated, the push higher has stalled as charterers resist, and rates are expected to ease from here. Med/East is softer and increasingly date-sensitive, with improved availability taking the edge off and owners struggling to hold levels. Less pressure West of Suez is easing the need for premium returns, and the bias remains to the downside as sentiment aligns with the wider correction.

Returning from the Easter holidays, the Med Aframax market resumed in a period of correction, with levels taking a more sizable rate of decline. Within the space of three deals the market had lost some 60 points in value, though it did take some perseverance from charterers to break the WS500 barrier, with levels settling at a low of WS460. Ultimately, sitting off and waiting yielded the desired result, though resistance remained strong given the amount of ships available on the early side of the list. As the week draws to a close, conditions in the US show Aframax markets moving positively, and with a weekend’s worth of global geopolitical developments waiting to unfold, expect any normality at your own peril.

US Gulf/Latin America

The Americas VLCC market experienced a relatively subdued week, with limited fixing activity and a steady but slow flow of cargoes entering the market. Continued tonnage availability, supported by ballasters arriving from the East, contributed to persistent downward pressure on freight rates, with levels softening to approximately $2m below those seen the previous week. While some deals failed to materialise, charterers who did enter the market were generally able to exert downward pressure on rates. Owners look toward a potential increase in activity next week to restore some momentum, while developments in the AG may also influence regional dynamics.

North Sea

Some feathering of rates this week on Aframaxes, with a mix of opinion on where things are headed. The other side of the pond is still looking pretty tempting for most, and we have seen double-figure ballasters depart this week with more likely to follow. Rates are sitting in the mid-to-upper WS300s for the time being, making TD25 returns still look like the obvious alternative for those who can find one. We expect a somewhat more active week ahead as things return to the status quo with fewer national holidays breaking things up. To suggest smooth, predictable sailing lies ahead would be a farce, but we are somewhat settled for now.

Crude Tanker Spot Rates (WS)

Clean Products

East

The war in effect continues even with the fragile ceasefire, and the Strait of Hormuz remains to all intents and purposes closed to all but the occasional vessel. Refineries remain slowed right down, with Sikka and Red Sea business really all that can be fixed. Tonnage is still ballasting away to avoid the area, as ballasting to UKC or USG continues to make better returns than taking the discounted freight on offer from Sikka. For those willing to ballast through BEM, Red Sea voyages are still making over $80,000/day TCE on LR2s and $60,000 plus on LR1s, led by the firm Med/East market where 80,000mt naphtha Skikda/Japan is fixing at historic levels of $11.5m.

Another subdued week in the AG for MRs, though the recent ceasefire between the US and Iran has allowed a handful of cargoes to re-emerge. That said, underlying geopolitical tensions continue to weigh on sentiment, with a number of vessels still effectively trapped in the region and owners remaining cautious overall. Cargo flow remains slow, with the majority of enquiry stemming out of India. Sohar and Duqm continue to command clear premiums over Indian loadings, reflecting both risk and limited owner willingness to commit. Tonnage availability remains tight as vessels continue to ballast West, and despite a seemingly workable list on paper, actual availability is far more constrained.

UK Continent

It has generally been a slower week in terms of volume, though this has not curbed owners’ enthusiasm or bullishness. The list has remained tight as the North still lacks ballast units, and those inbound laden continue to experience delays and ever-changing orders. The market has been propped up by a continuous need for replacements, and this shows no sign of subsiding anytime soon, particularly given the bunker spill situation in Antwerp. Transatlantic rates are still not the primary driver, and one cargo received six offers, underlining owners’ undiminished desire to reach the USG market where earnings remain spectacular. Rates TA have finished the week at around 37 × WS300, WAF 37 × WS450 is on subs, 37 × WS425 to Brazil, and demurrage remains in the $100k region. If the persistent replacement-style market continues, so will rates.

With the shortened week due to Easter, charterers were hopeful the four-day break would enable a few more Handies to firm up on the tonnage list, though this did not materialise as supply once again lacked depth ex UKC. That said, with a few ships targeted and picked off quietly under the radar, TC23 has traded at last done levels of 30 × WS475 for the majority of the week, until Friday morning when owners finally achieved an uptick of 10 WS points. With MRs showing little desire to trade short-haul as they look either to exit the region or lock in higher returns for a sustained period, we expect this Handy market to continue in similar fashion in the near term.

Med 

It has been a slow burner for MRs in the Med, with rates difficult to call given there has been little to no straight TA demand. A straight Med-TA stem would likely be discounted given owners’ keenness to reach the USG. The majority of enquiry seen has been options cargoes, which has skewed differentials as owners work out their economics accordingly. Looking ahead, with the USG continuing to draw ballast tonnage, it is a case of assessing how the list shapes up come Monday and what options are presented to charterers. An increase in demand will be needed to boost owners’ ambitions given current volume shorts.

In all it has been a steady week for Med Handies, with rates lingering around the 30 × WS530 mark for the most part. We opened with a spread of rates as charterers attempted to capitalise on the negative rate pressure carried over from the end of last week. However, an uptick in prompter enquiry meant the front end of the list was chipped away, leaving charterers with limited well-approved tonnage to close out the week and putting a positive spin on the market. It will be a case of how much enquiry surfaces next week, with a bulk of the end-month stems due to come, and if the restock is underwhelming owners could find themselves at the helm.

Clean Tanker Spot Rates (WS)

Dirty Products

Handy

This week feels like a tale of two regions, with the UKC market showing plenty of activity and enquiry almost from the off, whereas the Med has seen a slower week overall. In the North, cargoes quickly flowed into an already tight list at the start of the shorter week, with both naturally placed and WMed units on the thinner side. As a result, owners managed to move rates through the gears as enquiries continued to pick off units from the list. We finish the week with rate ideas at WS410 XUKC, and Monday could well bring another busy start, with any naturally placed replenishment likely to be clipped early should enquiry surface.

It has been a quieter week in the Med, where Monday’s list showed healthy levels of availability balanced throughout the region. The quiet can be explained by a mix of forward fixing ahead of the Easter holidays and charterers perhaps looking to take the sting out of the market and let some positions build. As usual, some under-the-radar cargoes clipped away a handful of units before enquiry ticked up somewhat come Wednesday and Thursday, where WS415 repeated and one fixture was reported at WS417.5. A steadier feel prevails, with owners looking to hold the line for now, though enquiry will need to surface early next week before negative pressure begins to slowly build.

MR

Much like the Handies, the North saw the better of full-stem enquiry this week, with levels tested upward beyond the WS300 mark. Naturally placed units were quickly clipped away alongside ballasters from WAF and WMed. Looking ahead, we expect supply to remain tight with owners looking to build, and rate ideas around the WS310-315 mark initially. In the Med, owners saw little full-stem enquiry, with opportunities for employment coming mainly by way of Handy cargoes. A fresh test is needed here, and despite the slower feel, rates are still holding steady at WS335-340 for now.

Panamax

Panamaxes saw a quiet week as enquiry slowed in the USG, with charterers and traders largely staying on the sidelines, preferring to wait and see what the evolving situation in Iran brings. As usual, some under-the-radar fixing was carried out, but the rapid firming of levels seen over recent weeks has been halted, with TD21 sitting around WS730 for now. Over in the UKC and Med, interest in backhaul runs remains, but with supply staying put for now a well-publicised fresh test is needed in both regions, with UKC-TA currently rating between WS215-220.

Dirty Product Tanker Spot Rates (WS)

Rates & Bunkers

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

wk on wk changeApr 9thApr 2ndLast Month*FFA Q1
TD3C VLCC AG-China WS82444362349437
TD3C VLCC AG-China TCE $/day98,000468,000370,000342,000454,000
TD20 Suezmax WAF-UKC WS-59296355261227
TD20 Suezmax WAF-UKC TCE $/day-55,250155,750211,000130,250105,500
TD25 Aframax USG-UKC WS-104616720249337
TD25 Aframax USG-UKC TCE $/day-38,500199,500238,00058,75089,750
TC1 LR2 AG-Japan WS74532458359 
TC1 LR2 AG-Japan TCE $/day25,750152,000126,25084,000
TC18 MR USG-Brazil WS97641544457372
TC18 MR USG-Brazil TCE $/day17,50095,00077,50064,00043,500
TC5 LR1 AG-Japan WS81555474361431
TC5 LR1 AG-Japan TCE $/day20,750113,75093,00057,50081,500
TC7 MR Singapore-EC Aus WS2321319255241
TC7 MR Singapore-EC Aus TCE $/day1,00035,50034,50017,50021,750

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

Bunker Prices ($/tonne)

wk on wk changeApr 9thApr 2ndLast Month*
Rotterdam VLSFO  -14658672800
Fujairah VLSFO  -717868571,057
Singapore VLSFO  -228088301,132
Rotterdam LSMGO  -4612311,2771,174

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