Resilient VLCCs

The global VLCC market appears to have entered a phase of cautious stabilisation with freight rates retracing from their war-driven peak back toward pre-war benchmarks. The severe freefall many anticipated from structural tonnage oversupply has so far been avoided. Negotiations between the US and Iran on a 60-day memorandum of understanding (MOU) to extend the ceasefire and reopen the Strait of Hormuz are ongoing, but final diplomatic signatures are still pending as key sticking points remain unresolved. Recent military strikes by both sides have only added to the uncertainty surrounding the talks.

The underlying freight fundamental picture remains highly nuanced. About 55 VLCCs remains trapped inside the Middle East Gulf, curtailing global VLCC tonnage supply. Both laden and ballaster counts in the East and West have begun stabilizing, taking roughly one and a half months after the onset of regional hostilities. Global VLCC ton-mile demand has contracted severely by a fifth, down from a 2025 monthly average of approximately 650,000 Mtm to a current baseline of around 530,000 Mtm, according to Kpler.

In response to the plunge in Middle Eastern barrels, total VLCCs positioning in the West has increased by approximately 60 units. A surge in western crude exports has absorbed the tonnage that fled the East. Led aggressively by the US exports, Atlantic crude exports to the East spiked to 9.46mbd over March-May, well above the 2025 baseline average of 8.16mbd. Approximately 500kbd of this incremental volume moved on long-haul VLCCs to the East, cushioning the global ton-mile drop. Additionally, as many of these westward ballasters are intentionally slowsteaming to stretch out voyages, actual prompt spot availability in the West is much tighter than the apparent vessel count suggests. Hence, the resilient demand and capped oversupply kept TD22 and TD15 TCE earnings at around $100,000/day in May, slightly above pre-war levels. The incremental US Gulf loading activity has also accelerated reverse lightering, boosting Aframax demand and triggering a notable dirty-to-clean trading switch.

In Middle East, unsanctioned and traceable crude and condensate export volumes fell further to approximately 7.59 mbd in May from 7.95 mbd in April. However, this decline masks an emerging workaround: ship-to-ship (STS) operations with transponder blackouts in the Gulf of Oman point to additional undeclared volumes clearing the market. The risk premium associated with the activities in Gulf of Oman has helped to keep TD34 spot rates broadly in line with pre-war TD3C levels despite a higher number of ballasters. Total number of VLCCs in the Gulf of Oman initially eased after the war broke out but has since rebounded to around 70–80 vessels, with roughly 60–65 of them in ballast. Aside from units actively arriving for STS operations, a handful of VLCCs are idling there, keeping regional spot supply artificially tight while perfectly positioning owners to instantly capture resurgent flows the moment the Strait of Hormuz reopens.

Looking ahead, the near-term trajectory of the VLCC market remains entirely hinged on the reopening of the Strait of Hormuz. As some owners are already showing interest to resume direct routing, an official deal will trigger an immediate operational pivot. The ballasters already waiting in the Gulf of Oman hold first-mover advantage to capture the initial wave of resurgent mainstream flows. This return of Middle Eastern barrels, alongside the risk premiums likely to be incurred until the regional situation fully stabilizes, are expected to support the East TCE rates. However, the speed and extent of rate firming remain strictly dependent on how quickly regional producers can structurally restore upstream production and export infrastructure once the Strait of Hormuz opens, as any prolonged operational lag will delay the physical tonnage squeeze. Meanwhile, Western benchmarks are poised to hold as the demand is expected to be resilient while the number of ballasters heading to the West falls. The remnant geopolitical risks compel refiners to continue diversifying their crude slates, sustaining robust long-haul demand for Atlantic alternatives.

Global VLCC Mainstream Distribution (count)

Crude Oil

East

The AG/Red Sea VLCC market experienced a quiet week, with Posidonia and public holidays limiting visible activity. Much of the reported business appeared to take place under the radar, making it difficult to accurately assess market direction. Freight levels softened slightly following a handful of fixtures that concluded below previous levels. Although overall rates remained broadly unchanged by the end of the week with two cargoes reported on Friday. Sentiment continues to be influenced by uncertainty and a lack of meaningful enquiry, leaving owners hopeful that activity will improve next week and provide a clearer test of the market.

Geopolitical uncertainty continues to weigh on the region. While Suezmax enquiry remains limited, cargoes from outside the AG have provided some activity and helped maintain market engagement. However, with no immediate prospect of a significant shift in sentiment, a sustained recovery appears unlikely in the near term. As a result, we expect to see additional vessels head west in the coming weeks.

The Asia Aframax market saw limited encouragement this week, largely as expected given the shortened trading week and the distraction of Posidonia. While there was a trim at the front end of the tonnage list, enquiry continued to emerge only at a drip-fed pace, and availability is expected to replenish as dates move into the third decade. Across the Pacific, Vancouver freight also softened, with the latest fixtures to China reportedly concluding below $3.5m. Charterers remain comfortably in control, with limited urgency allowing them to dictate the pace of the market. Owners’ sentiment continues to soften amid the lack of sustained demand. With fresh demand yet to materialise and tonnage expected to build further into the third decade, the near-term outlook remains skewed to the downside. We assess Indo/Up at 80 × WS160.

West Africa

The WAF VLCC market remained subdued throughout the week, with limited local activity and freight largely driven by developments across the Atlantic. A few cargoes emerged towards the end of the week, but enquiry levels were not sufficient to generate meaningful momentum. A healthy tonnage list, supported by the lack of activity in the Middle East, kept Charterers well covered and limited owners’ ability to push rates higher. Freight remained under slight pressure for most of the week, and a fresh market test will be needed next week to better assess current levels and sentiment.

The impact of Posidonia was evident in West Africa, with Suezmax enquiry lacking during the first half of the week and only a limited number of cargoes available for owners. A handful of failed fixtures did little to improve sentiment. As the week progressed, opportunities from Guyana and Brazil began to generate renewed interest, with rates appearing close to moving higher. Looking ahead, and taking into account the number of vessels ballasting towards the US market, there is a growing sense that the floor has been reached. With Posidonia now behind us, owners should see a broader range of opportunities develop next week.

Mediterranean

Despite Posidonia being in full swing this week, the Suezmax CPC market generated enough activity to push rates up by as much as WS220. Further enquiry supported these gains, with levels being consistently repeated throughout the week. Vessel positions remain relatively balanced for now; however, it is worth noting that Aframax rates in the Mediterranean have firmed, which could create additional part-cargo opportunities. Long-haul enquiry was somewhat subdued during the week, but with Posidonia now concluded, a greater volume of business is expected to emerge next week.

Posidonia celebrations do tend to slow the cogs of communication somewhat, with this time around being no exception. Throughout the week however the Med has remained active despite surface activity looking slow. Looking at the lists, availability is now a tad slimmer than we might expect, and the threat of West Med units ballasting to the US is ever more prevalent especially where US values have also risen. All in all, signals for the market remaining firm in the short term look pretty solid. As far as rates are concerned, reports will show a steady pattern (albeit for the replacement deals seen a couple of times this week), although potential for upside remains as we head into next week.

US Gulf/Latin America

The States VLCC market saw a softer tone throughout the week, with cargoes being drip-fed into the market and activity insufficient to generate sustained momentum. Several fixtures were concluded below previous levels, resulting in a gradual correction in freight, particularly on USG routes. Tonnage availability remained healthy, giving charterers ample options and keeping pressure on owners. While softer rates may encourage additional cargo volume in the coming weeks, the market ended the week with limited activity and sentiment remaining slightly negative. A stronger flow of enquiry will be needed to stabilise levels and rebuild confidence.

North Sea

A week disturbed by Posidonia didn’t stop people clipping out ships. Growth was, as it always is in the Nsea, slow and steady. Rates jumped up to WS152.5 with surrounding markets certainly adding the extra powder for owners to add a bit of extra resilience. Things are now looking pretty stable with relets still taking up a fair enough of the local business but the start of next week could still look relatively interesting. With the US market popping, further units will be heading that way to lock in better returns which will help keep local levels competitive.

Crude Tanker Spot Rates (WS)

Clean Products

East

There is a feeling that there could be signs of positive news to the end of war in Iran on the horizon. Traders have been starting to ask questions that haven’t been asked for quite a few weeks. Not expecting this to be an overnight fix, but an air of positivity makes for a change. That said, rates seen this week on the LR2s make for less positive reading for the owners. Some big negative corrections seen with WCI/Eafr fixed at 90 x WS150. There is a feeling that the floor has been reached and owners hope rates will recover, but stems are required and currently they remain thin. LR1s have traded flat over the week, but the pressure seen on the LR2s could see the LR1s also see a correction.

For MRs, a slow week overall, with public holidays, Posidonia and a lack of fresh cargo enquiry keeping activity subdued across the region. While some off-market business was reported, visible cargo volume remained limited and rates came under pressure throughout the week. TC17 ex-Sikka steadily softened as the week progressed, eventually falling to WS285, while Sohar premiums were cut back to 50 points in line with Duqm. Cross-AG activity was seen at $1.6m with four vessels on subs. With only a small number of outstanding stems visible at any given time, owners were forced to become increasingly competitive. TC12 is expected to face a fresh negative test following the weakness seen on TC17, with current earnings pointing towards levels around the WS200 mark. With the tonnage list continuing to build and cargo enquiry remaining thin, sentiment remains soft heading into next week.

UK Continent

MR tonnage displacement weighted towards the Atlantic basin continues to put pressure on rates and differentials. The UKC has seen an active export week with some volume TA and WAF but with inbound laden distillate tonnage and ballast units, rates have eased down. Unseasonal bad weather may throw a few itineraries off and produce some delays, so as ever a constantly evolving picture.

Not an especially active week for the North Handies, but one notable replacement cargo paid 30 x WS230 ex Tranmere, highlighting the dangers of prompt replacements. Not much desire to head South from most owners as rates in the Med are not too appealing. Owners are doing a good job of drip feeding tonnage into the market as are charterers with cargoes, so it doesn’t feel like we are drifting too far outside the WS210-220 range.

Med

With the wealth of tonnage favouring the Western markets for the time being and minimal volumes for export, we have seen MR rates come under pressure – reigning in differentials in the process. Little activity has been seen for the Med MR sector and with the USG recovering, charterers remain at the helm. Owners resolve should be tested next week should any fresh stems materialise.

For the most part the Handy Med segment has been softer with rates correcting downwards to 30 x WS190 levels, with sentiment softer – minimal enquiry and disruption from Posidonia are the main factors at play as well as a healthy list. It does not take much to get rates moving upwards and, with a return to regular business on Monday, eyes are on how much enquiry we will see. There is work to be done, however, regarding clearing through tonnage if this bearish sentiment is to clear.

Clean Tanker Spot Rates (WS)

Dirty Products

Handy

In the UKC, the week got off to a sluggish start as expected, with a large host of market participants descending on Athens. The list began the week with plenty of prompt tonnage to work through. Most dealings were concluded under the radar as levels began to soften from WS375, with ideas down towards the WS355-360 mark as positions continue to work their way up the list and idle days begin to mount for some. Looking ahead to next week, we expect to see additional units open up over the week, keeping negative pressure on rates. Owners will need a fast start in order to start clearing away prompt units and try to stop the bleeding.

The Med saw a similar week with options aplenty to choose from, with the market quickly softening to WS360 on Monday before more pressure began to mount as 30 x WS345 covered soon after. A handful of market deals clipped away some tonnage, but as the week drew to a close, enquiry ground to a halt. Additional supply is expected to open up over the weekend, which could leave Monday’s list with multiple prompt units spread across the region. Like the North, Med owners will need a fast start to clear availability. For now, rate ideas are around the WS340 mark with no bottom in sight yet.

MR

Following the Handies, full-stem enquiry has been mostly quiet and hard to come by across both sectors. The Med saw a prompt cargo covered at 45 x WS275 for an east med loading, raising some eyebrows, but these levels are unlikely to be repeated. As Handies soften, we expect to see a correction on the MRs, which currently look overvalued. In the North, some tonnage has been sat spot for a good while as enquiry stays elusive. Competitive rates should be on offer for voyages down to the Med. XUKC runs should also see a test down, with rates around the WS250-255 level on the cards next week.

Panamax

Panamax owners over in the USG have seen a much more positive week as momentum has swung in their favour. This has been mainly due to a firming Aframax market as tonnage has thinned, leaving some charterers to call on Panamaxes to plug the gaps. This, as well as the Jones Act waiver extension, has caused an uptick in enquiry for traditional Panamax stems, clipping away tonnage, allowing owners to begin to turn the screws. In the UKC and Med, little change to the physical side, with supply remaining scarce overall and firm enquiry just as elusive. However, rate ideas have seen some movement on a load-dependent basis. UKC-TA bss 80kt is softer than its Med counterpart at WS145-150 for a similar run, which in theory should put UKC-USG bss 50kt at WS170 levels and Med-USG at around the WS200-210 mark respectively.

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 4thMay 28thLast Month*FFA Q2
TD3C VLCC AG-China WS11403392459439
TD3C VLCC AG-China TCE $/day11,250421,500410,250485,250455,500
TD20 Suezmax WAF-UKC WS-13148161196196
TD20 Suezmax WAF-UKC TCE $/day-8,50060,50069,00088,25083,750
TD25 Aframax USG-UKC WS59252193292325
TD25 Aframax USG-UKC TCE $/day22,00062,25040,25075,00083,000
TC1 LR2 AG-Japan WS-16511527551 
TC1 LR2 AG-Japan TCE $/day-5,750145,250151,000157,250
TC18 MR USG-Brazil WS76321246315376
TC18 MR USG-Brazil TCE $/day13,50039,25025,75037,00046,000
TC5 LR1 AG-Japan WS-15541556604507
TC5 LR1 AG-Japan TCE $/day-4,000110,500114,500124,75098,750
TC7 MR Singapore-EC Aus WS-17296313355320
TC7 MR Singapore-EC Aus TCE $/day-3,00031,25034,25040,50034,000

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

Bunker Prices ($/tonne)

wk on wk changeJune 4thMay 28thLast Month*
Rotterdam VLSFO  +9714705801
Fujairah VLSFO  +821024942938
Singapore VLSFO  +6792786825
Rotterdam LSMGO  +10311241,0211,159

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