Orderbooks, Old Ships, and Sanctions

Tanker ordering activity for vessels above 25,000 dwt has dropped sharply this year, with total orders around 110 units. This decline reflects a mix of regulatory and market uncertainties, along with persistently high newbuilding prices. Current prices remain just below the multiyear peaks seen last year, while shipyards face little pressure to offer significant discounts. 2025 orders are well below the nearly 850 tankers contracted in 2023 and 2024, and broadly in line with the limited ordering activity seen between 2016 and 2022. The only segment where fresh contracting has remained relatively robust is Suezmaxes, with 36 tankers ordered so far this year.

On its own, restricted new investment always has the potential to constrain fleet growth a few years down the line, especially if accompanied by higher scrapping volumes. However, this needs to be looked at in the context of robust ordering activity that took place in recent years. Suezmaxes currently have the largest orderbook relative to its current size, with 20.4% of the existing fleet on order. This is followed by MRs and Aframaxes/LR2s, with orderbook in these segments at 19% and 18.8% respectively. The VLCC orderbook is notably smaller at 12.2%, while Handies have the smallest share at just 6.6%, reflecting owners’ preference to move up to larger segments. In contrast, the LR1/Panamax orderbook has grown significantly, reaching 16.6% of its fleet size after renewed interest sparked a surge in new orders last year.

Scheduled tanker deliveries are set to peak next year at their highest level since 2009 and will remain elevated into 2027, although delivery profiles somewhat differ by segment and some degree of slippage is likely. Accelerated deliveries pose a clear risk to market earnings in the coming years, but the rapidly ageing fleet offers robust prospects for tanker demolitions to offset that. Depending on vessel type, between 19% and 41% of the fleet is already 20 years or older, while a further 21% to 44% is in the 15 to 19 year range. LR1/Panamaxes and Handies have the oldest age profiles, while Suezmaxes and VLCCs are comparatively younger.

In reality, though, the demolition outlook remains much more complicated. Scrapping activity is still limited, as ageing tankers continue to carry Russian or other sanctioned barrels despite a rapidly expanding list of sanctioned vessels. Aframax/LR2s, Suezmaxes, and VLCCs are most exposed, with around 23%, 14%, and 13% of these fleets already sanctioned by various jurisdictions and another 8-9% potentially at risk due to questionable trading. Despite an intensifying wave of sanctions, a meaningful uptick in removals has yet to materialise, with scrap values notably below sale prices of 20 year-olds intended for further trading.

With Ukraine-Russia peace negotiations stalled and the EU planning additional measures, arguably Russia’s need for ‘dark’ ships remains strong, dampening scrapping prospects particularly for Aframaxes and Suezmaxes, unless circumvention routes are cut off. Meanwhile, a breakthrough in US–Iran talks could reduce demand for illicit trades on larger crude carriers, but for now the likelihood of such a deal appears slim.

Taken together, although fresh tanker orders have slowed considerably this year, the sizeable existing orderbook means tanker supply is set to grow over the next few years. Large increases in demolition activity are needed to offset this growth but for that to happen a major political breakthrough related to Russia and Iran is needed and/or a much tougher enforcement of existing tanker sanctions. Still, despite weak scrapping for now, the ageing fleet means that except for 2026 the size of tanker fleet under 20 years of age is projected to decline in the coming years. Ultimately, demolition will have to happen eventually.

Total Tanker Orders per year (over 25,000 dwt)

Crude Oil

East

Some positivity returned to the VLCC sector as cargo volumes picked up for the third decade and made a dent in the position list. Whilst the gains were minimal there is a feeling the market could pick up some momentum next week as charterers move to complete their July program and we await the arrival of early August stems. Today we are calling AG/China WS48 and AG/USG WS30.

The Suezmax market in the East remains a snoozefest. Owners will be hoping that with a firmer VLCC market, we start to see some improvement next week. AG/West today charterers will be pushing for 140 x WS45 via C/C. Rates to head East remain under pressure from the VLCCs taking part cargoes and today rates for East are approximately 130 x WS95.

Flat week in the AG on Aframaxes. Rates have softened a touch as more owners look to remain in the East rather than transit GOA. TD8 is around 80 x WS140 level to close.

West Africa

There was little to get excited about in WAF VLCCs this week as activity was limited and owners with tonnage in the area were forced to consider other options. Rates are slightly better week on week as the reluctance of ships to ballast west has meant the tonnage list is fairly balanced and charterers looking to cover first decade August need to thread carefully. We are calling WAF/East in the region of WS52.5 today.

A good level of enquiry this week for Suezmaxes will have owners trying to push over WS80 for a TD20 run next week but realistically more firm positions opening up over the weekend will likely keep rates steady. Rates to go East are still at a premium of around 10 points but we are starting to look a little more limited on ships keen for that run.

Mediterranean

On Suezmaxes, TD6 has tested downwards this week to WS90, but charterers are having to gamble more on itineraries to achieve last done levels. This market is showing some signs of firming. Rates for Libya/Ningbo are relatively untested still but we feel charterers will be looking at around $4.2m.

Sailing with an even keel is the best that can be said for the Mediterranean Aframax market this week. Surrounding markets have offered little support spiritually or economically and as such freight rates struggled to break out of their recent lows. Despite the downbeat sentiment there was a healthy amount of business concluded with the front end of the list stripped bare as charterers filled their boots at WS125-127.5 levels for Ceyhan and Libya cargoes into the Med. CPC was thin on volume, but the conference level was set at WS147.5 for Med discharge with a 2.5 premium achieved for replacement business. As the week ended and owners were able to digest a tighter tonnage list, they attempt to claw back some of the losses of previous weeks. WS127.5 was concluded for a Ceyhan replacement with the same repeated and potentially more to come in the next days; in order to come to pass this will need a busy Libya last decade to kick on quickly at the start of next week.

US Gulf/Latin America

At last, we saw fresh activity on the VLCC USG export market after the recent lull. Despite limited tonnage availability, especially for earlier laycans, rates have not improved as much as owners were hoping for. They are still showing resistance and next week should see some gains especially if we see more volume going to UKC. Brazil exports were active again this week as some owners made good returns on replacement stems but despite initial higher expectations rates have now stabilised. Today we estimate USG /China pays $7.15m while Brazil/China is in the region of WS51.5.

Local Aframaxes trended sideways this week, WS140-145 for TD25. Still some prompt positions on the list but also a gap in the list, leaving prompt ships with a fighting chance to keep rates from falling. If a quiet start to next week, could see more softening but just minimal inquiry should keep rates steady.

North Sea

An overall static week in the North for Aframaxes with levels trading seemingly around the WS120 mark for the duration. The region has been well supplied with relets which have been utilized, leaving spot fixing in the dark. When the next true test does arrive sub WS120 is expected to be done as the summer lull continues.

Crude Tanker Spot Rates (WS)

Clean Products

East

Busy week across the board for the LR1s and LR2s. The LR1s have been publicly busy and seen the front end of the list really clear out. Yet there hasn’t been a significant push on the levels, TC5 at the 55 x WS140 levels and UKC at $2.85m but with the list tightening up there could be opportunities for owners to apply pressure. The value has certainly been on the LR2s this week and charterers have seen this and covered a lot of units off market. Headline rates don’t show a true reflection of this market. TC1 on subs at 75 x WS110 however, assess that next will fall into the WS120 bracket. West in need of a true test but for now at $3.75m levels. As the third decade approaches owners will be hoping that the foundations have been laid to see a progression on last done levels.

MRs in the East have seen a lot of activity with rate climbing as a result. A generous list of stems to be covered come next week will spur owners. Assess West at $2.3m levels, TC12 at 35 x WS170 and EAFR at 35 x WS225. Expect these rates to be positively test early next week.

UK Continent

MR rates had been driven down by a very weak UKC export market and a highly attractive USG export market to a low of 37 x WS90. However, the USG rates have now taken a beating and the desire and therefore perceived discount to go TA is diminishing. The problem for owners is really that rates were pushed down to these levels due to the USG, but the fundamentals on the UKC are not really changing anytime soon and yet the round-trip earnings have just gotten worse. 37 x WS95 seems to be the going rate TA as we go into the weekend, no real sign of change ahead as some MRs that fixed short haul stems will be back on the list next week. A very typical summer market, hurricane factor to be watched carefully.   

For most of the week, we have seen Handy levels trade at 30 x WS125 for XUKC and 30 x WS115 for UKC/MED. Even by the midweek stage, when Handy supply started to tighten on the front end of the tonnage list, MRs decided to jump on 30kt clips and repeat last done levels of 30 x WS125. Although come Thursday, 30 x WS130 was paid for a replacement as owners now look to repeat this slight improvement although with MRs trading at 37 x WS105 (equivalent of  30 x WS129.5) expect the bigger units to act as a cap for the short term.

Med 

The Med appears to have produced a West to East Med MR differential with the low flat ex Sines being the unusual one to get down to 37 x WS100 TA. Central Med naphtha stems are going at 110 TA and 130 XMed but short haul deals will only compound the list going forward and fresh positions keep popping out. No real sign of change ahead, low and slow appears to be the ongoing mantra for the summer. The Red Sea may draw some units away as owners hunt for better earnings. 

All in all, it has been an active and steady week for Handies in the Med. Rates have been maintained at 30 x WS130 levels for XMed with a couple grade sensitive stems paying five points higher. The main talking point is around the tonnage list which continues to be balanced and well stocked. The fixing window has been varied with some prompt stems and cargoes over seven days out locking in the same rates which is proof that we have cemented in at bottom levels. Looking forward to next week, owners will be watching if any grade sensitive stems are quoted in hope this could squeeze rates up as there is little chance of tonnage tightening in the short term.

Clean Tanker Spot Rates (WS)

Dirty Products

Handy

It’s not been the week that Handy owners would have hoped for in NWE as enquiry has struggled to surface for a second successive week. Well-approved and modern tonnage is readily available with little enquiry to clip away units leaving negative pressure to build. 30 x WS250 was fixed earlier in the week signalling a WS 7.5 point drop in levels from last done. We close out the week with little activity to report and a lengthy looking list, owners will need enquiry to surface quickly to start clearing built-up tonnage. We think levels are set to soften further down towards the WS240 mark on next done.

The Mediterranean has seen a reversal in its fortunes this week following a busy and active week. Monday morning saw a lengthy-looking list with options across the board for charterers to choose from. With levels softening down to 30 x WS220. On Tuesday activity picked up and began clearing prompt tonnage from the list offering support and leaving WS220 repeating numerous times. Ships continued to disappear from the list as charterers began reaching slightly on dates causing rates to firm up to 30 x WS230 for a vanilla XMed run by close of play on Friday. Looking ahead, we expect to see a tighter top of the list but with the forward fixing seen this week, we expect a quieter start to proceedings. 

MR

North MR owners have seen a similar week in terms of activity to their Handy counterparts as tonnage worked its way up the list with few questions asked of them. Levels for now hover around the 45 x WS165 mark with additional units soon to open up and create more competition, we could see levels tested down further. It’s been a mixed bag for owners in the Med as full-stem enquiry started the week in a sluggish manner seeing rates soften down to 45 x WS155 with options in play. Enquiry then quickly surfaced in the market with 45 x WS160 and the equivalent repeated. Looking ahead to next week we expect to see a balanced list with tonnage available to work, we feel levels will hold steady at the 45 x WS160 mark. 

Panamax

Panamaxes over in Europe have had little to get excited about as enquiry struggled to surface. A well-publicised fresh test is needed for UKCM/TA runs but ideas still hold around the WS115 mark for now. TD21 saw a marked correction in rates almost immediately after the States came back from the 4th of July weekend. Rates fell from WS190 to 50 x WS160, however, support here was found and multiple deals were concluded steadily clearing tonnage from the list. Owners will be hoping to build on this momentum where firming of levels could be on the cards.

Dirty Product Tanker Spot Rates (WS)

Rates & Bunkers

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

wk on wk changeJul 10thJul 3rdLast Month*FFA Q2
TD3C VLCC AG-China WS249474455
TD3C VLCC AG-China TCE $/day2,00028,50026,50022,50030,500
TD20 Suezmax WAF-UKC WS-280827578
TD20 Suezmax WAF-UKC TCE $/day-1,75025,75027,50024,25021,750
TD25 Aframax USG-UKC WS-5140145138130
TD25 Aframax USG-UKC TCE $/day-2,75030,00032,75031,25021,750
TC1 LR2 AG-Japan WS-9111120114 
TC1 LR2 AG-Japan TCE $/day-3,50021,75025,25023,500
TC18 MR USG-Brazil WS-73176249163169
TC18 MR USG-Brazil TCE $/day-14,00021,25035,25018,75018,000
TC5 LR1 AG-Japan WS5144139139145
TC5 LR1 AG-Japan TCE $/day1,00022,25021,25021,50020,250
TC7 MR Singapore-EC Aus WS-1202203196177
TC7 MR Singapore-EC Aus TCE $/day-50022,75023,25022,00017,500

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

Bunker Prices ($/tonne)

wk on wk changeJul 10thJul 3rdLast Month*
Rotterdam VLSFO  +9521512477
Fujairah VLSFO  +6521515515
Singapore VLSFO  +2524522524
Rotterdam LSMGO  +39707668631

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