Reassessing Russian Supply

Earlier this week, President Trump announced that the United States and India had agreed a trade deal. Whilst the deal is not expected to be signed until March, Trump claimed that India had committed to stopping imports of Russian oil. For the tanker markets, such a move would be significant and lead to further adjustments in oil trade flows. However, India faces a number of challenges in weaning itself off Russian oil, whilst Russia itself will struggle to redirect Indian volumes to alternative markets. Notably, the Indian government is yet to acknowledge the agreement to cease Russian oil imports entirely.

India has already made significant cutbacks in Russian crude imports, receiving 1.1mbd in January, down 46% from average 2025 levels as sanctions and US pressure have reduced purchases. Imports were already set to temporarily fall further as Rosneft’s Nayara refinery enters maintenance in April. However, in the short-term flows might actually increase, with several refiners having recently returned to the Russian market following steeper discounts and replacement suppliers for the now sanctioned Rosneft and Lukoil. Looking ahead, it seems inevitable that imports will ease further on political pressure.

The key questions then become, where does India replace from and where does Russia redirect to? In terms of alternative supply, Trump’s recent announcement suggested India would take more from the US. However, light US grades such as WTI are not a direct replacement for Urals. Indian refiners would likely prefer to take more Middle Eastern, Latin American, Venezuelan and perhaps even Canadian barrels over WTI. Interestingly, a blend of Venezuelan Merey with WTI could be a viable substitution and suit America’s policy objectives. However, this would likely prove less economic than Middle Eastern grades. For displaced Russian crude and products, China is the only viable large-scale alternative, though some Middle Eastern countries may take more Russian fuel oil as power generation demand rises. Given the loss of Venezuelan supply and risks to Iranian deliveries, China likely has capacity to absorb additional volumes. However, this all depends on independent refiners obtaining favourable pricing, sufficient import quotas, as well as having the required risk appetite. Higher Russian flows into China also risk backing out mainstream barrels, potentially putting downwards pressure on benchmark freight rates.

Russia will also likely face growing logistical constraints with its oil on the water reaching record levels last month. Longer journey times and difficulties selling have also raised costs and increased dark fleet demand. If Russia struggles with a shortage of tonnage, it may eventually be forced to cut production or further expand its shadow fleet.

In the near term it seems certain that India will further reduce Russian imports in favour of mainstream cargoes, leading to another shift in demand from the dark to mainstream tanker fleet, likely increasing upside volatility in freight rates. Yet Russian oil will not simply disappear, making China’s appetite for these cargoes a key factor for the strength of the broader tanker market. Let’s not forget, the harder it becomes to sell Russian oil, the steeper the discounts on offer, the more tempting those barrels become and perhaps, the more pressure on Russia to find a path to peace.

Indian Crude Imports From Russia (kbd)

Crude Oil

East

The AG VLCC market opened the week on a slower footing following last Friday’s sharp jump in freight levels. Rates remained very firm, prompting some charterers to hold back or quietly cover cargoes under the radar in an effort to ease pressure on the market. As the week progressed, visible activity remained limited despite earlier elevated levels. While some fresh enquiries surfaced midweek, they were not sufficient to materially shift sentiment, which remained broadly steady. Toward the end of the week, fresh enquiry was again limited, leaving freight levels largely unchanged. Owners will be hoping for a renewed flow of cargoes early next week to help complete coverage of the remaining third-decade stems.

The Suezmax market in the East remains firm, and delays in India are keeping the list tight. Owners will be expecting more of the same next week. For Basrah/West via cape expect Owners to be pushing for more than last-done 140 x ws 82.5. There are a few ships in position that aren’t able to transit Suez though, and it seems likely it will be repeated. For cargoes heading East, there are a few keen candidates looking to lock in a long run, and we may see rates pushed just below 130 x ws 170.

Activity in Asia saw intermittent bursts of mid-Feb enquiry, though sentiment ultimately softened. A replenished yet balanced tonnage list pressured rates, with an Australian-bound run fixing around WS7.5 points below the benchmark. Similarly, repeat Thai regional fixtures suggest a new floor emerging roughly 15% lower. Despite the correction, rates are expected to hold at current levels. Anticipation of a busier second half of the month, combined with continued lightering demand, should help tighten the list once again. Expected ballasters may also enter the mix, given that earnings in adjacent markets both east and west remain more attractive than in the region. Overall, the tone has softened modestly, and we close the week assessing Indo/North at 80kt x WS200.

West Africa

The WAF VLCC market experienced a quiet start to the week, with little fresh activity reported on the surface. In line with surrounding regions, freight levels edged higher, and owners showed resistance to fixing at last-done levels.
As the week progressed, activity remained muted. Freight stayed on the firmer side, although a lack of fresh enquiry meant that the market was not fully tested, leaving some uncertainty around current levels. The tonnage list appeared broadly balanced, helping to maintain stability.
By the end of the week, conditions remained largely unchanged. Despite limited enquiry, freight rates held steady, keeping owners’ sentiment positive and leaving the market cautiously optimistic heading into next week

Some life has been breathed into the WAF Suezmax market this week, and owners have been successful in pushing rates back up after a short blip. TD20 is around 130 x ws 157.5 today and looks to be steady, at such high levels there is a lot of pressure for owners to lock in the rate. The premium to head East today is still around 7.5 points, with a couple ships keen on this run though, we could see this squeezed quite a bit lower depending on the cargo dates.

Mediterranean

On Suezmaxes in the Med TD6 has been steady/firm throughout this week and with the limited pool of owners still willing to fix this business, last-done of 135 x ws 200 is going to be tough to break below. We have seen a few end month stems reduced to Aframax stems but generally the outlook is still pretty positive. Libya/Ningbo has been relatively quiet this week and remains quite an illiquid market, but we estimate via cape, owners are going to be looking for something around the $6.8m mark.

US Gulf/Latin America

The Americas VLCC market experienced a relatively quiet start to the week, with little fresh activity reported on the surface. Freight levels remained elevated, helping to keep Owners’ sentiment positive, although limited enquiry meant the market lacked a clear test early on. As the week progressed, activity remained subdued overall. A Petrobras quote provided some surface visibility, but charterers largely preferred to work under the radar, leaving freight levels broadly unchanged around last-done levels. The tonnage list appeared balanced, preventing any immediate pressure in either direction.
Toward the end of the week, some questions were raised in the USG, though tangible fixtures remained scarce. In contrast, the Brazilian export market showed a pickup in activity, with several private deals concluded at around the same level. which closed the week largely unchanged.

North Sea

Whilst many of us following the Aframaxes in the Continent didn’t really expect levels to maintain trading at their absolute peak, given the slower feel to cargo volumes, the steep correction down to WS 180 was also a bit too dramatic. Upon further testing an immediate rebound back up to WS 190 was set, particularly as bad weather in the continent has remained a constant driver for sentiment. With further replacement business thereafter, and a US market following a similar pattern, we close the week with sentiment looking rather flat in its immediate trajectory. 

Crude Tanker Spot Rates (WS)

Clean Products

East

A slow and quiet week in the AG for the LRs; weakening sentiment allowed charterers to put pressure on the owners and see a negative correction. As a result, TC1 tumbled down do 75 x WS190 with 90 Jet AG/UKC dropping to $4.3m (via cape). LR1s are seeing the same trend with a number of ships being failed, a building tonnage list and a lack of stems. TC5 is down to 55 at ws205, whilst 60 Jet AG/UKC needs a fresh test but is expected to land at $3.3-3.4m levels. With a real lack of open stems as we approach the weekend, tonnage lists building, IE week next week followed by Chinese New Year, it looks like it further softening is on the cards.

The AG MR market started the week relatively flat with activity limited largely due to all eyes being on geopolitical developments. Rates initially traded sideways while replacements were sought with Duqm–East Africa repeating at ws280. A steadily growing ballast list for natural dates capped any upside and as the week progressed, a lack of fresh enquiry combined shifted sentiment. Ballast counts grew from around 16 vessels early in the week to 18 units heading into mid-February, with additional pressure from weaker TC7 earnings, now trading approximately $4.5k/day below TC12, encouraging more units from Singapore to commit towards the AG. Drip fed cargoes have slowly chipped away at the front end of the list, though overall tonnage availability remains ample beyond mid-month. TC17 has since softened to around ws255, with downside risk persisting into the latter part of the second decade should enquiry remain subdued.

UK Continent

A busy week has seen the MR position list and the cargo list clear out. Rates have pushed up on most runs and largely due to the extraordinary sentiment of a white-hot USG market. Not a single non ice class, non-Russian playing vessel would ballast this way as earnings everywhere else are better. Laden boats are still plentiful going forward on the UKC but picking out a firm itinerary is both a gamble for owner and charterer alike. One factor we may see coming into play a little more is non ice class Russian players seeking solace in the UKC – WAF / Brazil / Med markets as the Baltic continues to freeze. Rates are firm as we go into IE week, 37 x ws 227.5 to WAF  37 x ws 180 cross UKC and ws220 to Brazil. TC2 is firmly still in back haul territory so owners rate it basis least ballast, least waiting and the fastest route to Houston. 

The resupply of Handy tonnage up in the North this week has been problematic and those who have had to cover have either targeted ships under the radar or had to lean on the MRs in order to find some coverage. TC23 by midweek firmed to 30 x ws230 (ex Brofjorden) with other owners now looking to repeat this new high although with MRs covering at 37 x ws180 for a XUKC, the bigger units have acted as a cap. Looking ahead, Handy tonnage has been displaced in favour of the MED so if enquiry persists expect this bullish attitude from owners to remain.

Med 

A bit of a false start for MRs this week with a wealth of enquiry coming thick and fast on Monday and a grade sensitive replacement going on subs at 37x ws185 Med-UKC levels. However, with UMS imports more frequent to the Med and refineries in turnarounds, questions were being asked concerning how much demand there would be. Rates continued to tick by as slow enquiry allowed for where we are now at the ws150 mark for Med-TA. But it seems there is an edge in this market given how tight the front end of the list is, which has helped buoy owners’ sentiment going into the weekend. A point of note is how strong USG rates are meaning any willing Med players could be there to discount this run given the triangulation econs are there. With a handful of stems outstanding, eyes are on what business is rolled over given it is IE week next week and if so how the list shapes up. 

In all it has been a relatively stable week for Med Handy rates, largely due to weather improvements for the first few days as well as an increase in enquiry which led to a general buzz in the market. The recent floor of ws250 is where we opened as port backlogs were worked through and both parties accepted fixing levels. However, with the weather forecast turning by the end, eyes were on the potential for delays and replacements acting as a catalyst for a rate push. Steady enquiry is tightening the list as well as grade sensitivity, building some positive rate pressure. With a high of 30 x ws280 on subs yesterday on a replacement ex Libya, ws270 seems a fair call going into the weekend. With it being IE week next week some disruption is expected but bad weather persists so rates are not expected to fall below the historic ws250 floor level.

Clean Tanker Spot Rates (WS)

Dirty Products

Handy

Both markets continued with their upward momentum this week as enquiries flowed into tight lists. NWE got off to an active start with WS265 before the market began to firm further as the few ships available were picked off. Rate ideas now sit around the WS290-292.5 mark by close of play on Friday, but a fresh test is required to see where levels truly lie. Looking ahead to next week, we expect to see tonnage remain tight with owners applying upward pressure, and if enquiries get off to a fast start, owners will have their eyes on WS300.

The Med has remained hampered with weather delays, causing itineraries to remain uncertain. As a result, replenishment on Monday was on the light side, and enquiry began to flow into the market. WS300 was repeated multiple times before an Italian cabotage cargo was reported to have fetched WS315 in theory marking vanilla XMED run as WS305. Come Friday, these levels were realised, and owners now have a solid benchmark to build on. Looking ahead to next week, the weather will remain a concern, and we expect to see owners continue to push rates on. 

MR

It’s been a relatively quiet week overall on the MRs, mainly as a result of the lack of tonnage available. In the North, tonnage has remained scarce, with levels in need of a fresh test, but we expect to see rates tested up toward the WS190 mark as some additional tonnage is expected to populate the list and move into the fixing window. In the Med, we saw a similar story, but rates were tested up to WS210 before failing subs. On the whole, tonnage remains thin with owners keen to test rates upward when given the chance.

Panamax

Workable units this side of the Atlantic remain scarce, and the majority of vessels over here need to DD in the Med. Levels need a fresh test, with ideas ranging from WS170-180 for runs into the USG for now. Over in the Americas, TD21 has held steady at WS400 as enquiries continue to flow but at a somewhat slower pace. The list remains tight, and off-market deals still rule the day. For now, we expect this sector to hold early 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 changeFeb 5thJan 29thLast Month*FFA Q1
TD3C VLCC AG-China WS431379574117
TD3C VLCC AG-China TCE $/day50,250130,25080,00059,500102,000
TD20 Suezmax WAF-UKC WS-3154156128154
TD20 Suezmax WAF-UKC TCE $/day-1,25073,50074,75058,25068,000
TD25 Aframax USG-UKC WS-40277317221253
TD25 Aframax USG-UKC TCE $/day-14,50080,25094,75060,50066,500
TC1 LR2 AG-Japan WS-24190214181 
TC1 LR2 AG-Japan TCE $/day-7,25047,50054,75045,750
TC18 MR USG-Brazil WS102334231233220
TC18 MR USG-Brazil TCE $/day18,50048,00029,50030,75025,500
TC5 LR1 AG-Japan WS-15205219191206
TC5 LR1 AG-Japan TCE $/day-3,00036,50039,50034,25034,500
TC7 MR Singapore-EC Aus WS-14232247234226
TC7 MR Singapore-EC Aus TCE $/day-2,00027,25029,25028,50025,000

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

Bunker Prices ($/tonne)

wk on wk changeFeb 5thJan 29thLast Month*
Rotterdam VLSFO  -4442446395
Fujairah VLSFO  -14459472414
Singapore VLSFO  -19470489420
Rotterdam LSMGO  -27669696599

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