Sideline Observer

Over the weekend, the world woke up to the extremely disturbing news coming out of Israel, with the conflict escalating rapidly as days went by. Oil prices initially gained on the news but retreated later in the week on the realisation that neither Israel, nor its direct neighbours (except Egypt) have any meaningful crude production. Although Egypt is a relatively big producer, with its output at 600kbd last year, there appears to be little apparent risk here as the country, a frequent mediator between Israel and the Palestinians, always insisted that the two sides resolve conflicts within their borders.

In terms of its energy needs, Israel has to rely on crude imports which are fed into 110kbd Ashdod and 197kbd Haifa refineries. The port of Ashkelon is the main receiver of crude into the country, with its intake averaging circa 230kbd last year, accounting for over 85% of total crude imports. The port, around 15 km away from Gaza, has been shut in the wake of conflict. Both Israeli refineries were operational at the start of this week, but the picture is less clear now. The Ashdod refinery is in a more vulnerable position, with NorthStandard as of Oct 11 reporting that the port of Ashdod is operating in emergency mode only, as it is “subject to attack by missiles”. If a significant part of Israeli crude import infrastructure remains offline for an extended period of time and/or domestic refineries face disruptions, the country could be forced to rely on product imports.

The wider crude tanker market at present is largely unaffected by the developments, driven by other factors; yet, additional premiums are being demanded by tanker owners for Lebanon-bound clean cargoes. Yet again, similar to Israel, Lebanon is not a major player, with its CPP imports averaging around 100kbd so far this year.

Beyond the immediate conflict zone, the current crisis also threatens to derail the recent de-escalation of tensions between the US and Iran. Iranian crude production has increased in recent months to its highest level since late 2018 amid what looks like a soft-touch approach to existing US sanctions. Last month, the US government also approved a prisoner swap with Iran in a deal, which allowed South Korea to unfreeze nearly $6 billion of Iranian assets, although these currently sit still untouched in Qatari bank, with senior US officials yesterday vowing to stop the funds’ transfer to Tehran without Washington’s consent.   If Iranian crude exports are to face renewed downward pressure, this will create a vacuum for additional export volumes from other Middle East OPEC+ members, or if that vacuum is not filled, propel oil prices even higher (with negative consequences for the global economy).

However, that risk has been slowly receding in recent days. Although the close relationship between Iran and Hamas is well-known, Iranian officials have firmly rejected any suggestions of its involvement in the latest events, stating that Iran does not intervene “in the decision-making of other countries, including Palestine”. Similarly, initial US intelligence has indicated that senior Iranian government officials were caught by surprise by Saturday’s attack.

Nonetheless, with violence escalating,  the concern that the war could spread beyond Gaza persists as a prolonged and difficult conflict between Israel and Hamas unfortunately appears inevitable at this stage. Yet, the oil industry remains just a sideline observer, at least for now…

Crude Oil Prices ($/bbl)

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Crude Oil

Middle East

It has been a positive week here for VLCCs, as we have seen decent levels of enquiry, which has got the market moving in an upward trajectory. Owners’ sentiment is firm, with the momentum continuing to build and VLCC Owners are able to capitalise, with Charterers looking to cover. After such a busy week, levels are currently at ws 57.5 for an East run; however, this could get close to ws 60, if stems come out over the weekend and we have a busy start to the week. The AG remains for Suezmaxes firm this week, though mainly off the back of other regions. Rates to head West are approximately 140,000mt x ws 70. Rates heading East remain steady, with older tonnage still available and are about 130,000mt x ws 97.5 today for AG/East. Busy week in the AG for Aframaxes as well, with lists tightening. This will see rates rise, especially with all the noise in neighbouring markets… The only way is up! AG/East closes the week at 80 x ws170.

West Africa

Suezmax markets in West Africa have firmed drastically throughout the week, largely due to a very active US Gulf market. TD20 is a topic of debate across the market and many feel that we will be looking in excess of ws 120 next week. Premiums to head East seem to have dissolved. A huge contrast from the previous week for VLCCs, as activity/enquiry levels have grown. We expect rates to continue to rise, supported by a strong USG market. As it stands, rates for a generic WAF/EAST voyage are 260,000mt x ws 60.


Suezmax markets in the Med have firmed due to the activity in the Atlantic and rates have pushed up to 135,000mt x ws 95 and likely more for TD6. Runs into the East need a fresh test, though our judgement is that it is likely hovering around $4.2m. An interesting week for Aframaxes in the Mediterranean. Although not initially the epicentre of activity, the booming market in the States changed Owners’ outlook. The potential to ballast away from the Med for most Owners gave all the impetus that was required to push rates on. Cross Med rates of ws 110 levels moved up suddenly to ws 125 and then Owners have been holding the line since, offering over ws 200 for vanilla runs. Where the music stops, at the moment no one knows.

US Gulf/Latin America

The USG market this week has been extremely active. There have been healthy levels of enquiry, coupled with ships going on subjects way over last done levels. Sentiment for VLCC Owners has firmed and with a tightening tonnage list, one can only foresee that levels will not falter for now. Last done from the US Gulf to the Far East is at $9.50m, with TA voyages reportedly done at $4.5m. A healthy amount of Aframax enquiry has brought this market into life, with levels working above last done. Owners’ sentiment will remain firm for now. A Caribs-Up voyage was last done at ws 200.

North Sea

The North Sea has profited off the back of a general uptick in Aframax rates globally. Although rates haven’t quite taken off to the same extent as surrounding regions, growth from ws 95 to ws 125 is still significant compared to recent months. More to come next week.

Crude Tanker Spot Rates (WS)

Clean Products


Busy week for both the LR2s and LR1s this week, where rates have seen a real positive push, as tonnage list thins on both sizes. This has been reaffirmed by the fact that Charterers have been putting stems out into the market off more forward dates, as they try to pick good safe ships. TC1 at 75x ws 155 and Jet West at the $4.2m levels on the LR2s. And for the LR1s, TC5 has pushed up to 55 x ws 170 on subs but Owners gunning for ws 180 next. West has been hard to cover as Owners are preferring the East runs, and as such assess Jet West at the $3.7m levels. With a number of cargoes still uncovered and off-market COA liftings very active on both sizes, expect to see another busy start to next week.

A bearish week for the MRs, as Charterers took advantage of a long position list to bring TC17 down to ws 240-250 levels (25-26k/day TCE) and TC12 to ws 200 (32k/day TCE). Into next week we feel there is potential for a little more to come off the headline rates. However, with the LRs busy, the Singapore market busy enough to prevent ballasters and general market sentiment for the rest of Q4 still positive, this feels like a short-term correction before an eventual bounce back towards ws 300 again into end month/early November.


It’s been an up & down week for the Handies in the Mediterranean with rates bouncing around purely off of sentiment. We began the week with X-Med trading at the 30 x ws 145 mark but with enquiry picking up rates began to move gradually towards the ws 200 levels. Wednesday however saw a spike in rates off the back of the conflict in Israel causing complications especially ex-East Med and as a result 30 x ws 300 was achieved ex-Zawia. Owners were bullish come Thursday morning but with a couple cargoes being withdrawn and fixing dates extending out, we have seen a decline begin and at the time of writing with rates are back to 30 x ws 200. Heading into the weekend, we expect this pressure to continue given the options around for Charterers off the current window.

Med MRs have had a steady week with rates trading sideways for the majority. Med/TA has been repeated at the 37 x ws 180 mark throughout the week despite TC2 trading at around 20 points less. This has been due to an active Handy market for the first half of this week and also better enquiry down in the Med all-round. Fast-forward to Friday however and there is little left to cover and given that TC2 has slipped once more to 37 x ws 155. You feel that it is only a matter of time before the Med follows suit.

UK Continent 

The lack of TC2 enquiry has really prevented any momentum building with the sector being saved by an increased number WAF stems. We slipped down from the 37 x ws 180 mark fairly rapidly to 37 x ws 160 by midweek and a few late Friday deals saw defences slip again down to ws 155 for the few and far between TA runs, which have been a preference for many. South America runs have ticked along but we do start to see some increased interest in South Africa discharge which will interest a few Owners for sure. Next week, early enquiry will be key but for now we feel that Charterers have probably squeezed all they can from the market this week.

Similarly to the MRs, the Handies this week have also struggled to gain much of a grip on rates with 30 x ws 200 being a thing of the past as we stare at ws 170 now for X-UKC. In general, enquiry has been slow, but the weight of available tonnage has been the killer and the only small piece of optimism to hold onto is the firmer Mediterranean market, which should keep a lid on tonnage lists for next week. A flat end to the week.

Clean Tanker Spot Rates (WS)

Dirty Products


Levels in the Continent have been set waiting to kick into another gear; however, drip-fed activity this week has failed to provide enough impetus for this to happen. That said, with a breather being given for itineraries to become a tad firmer (although levels remain firm),  Charterers can feel a little more comfortable that what they fix is a little more reliable. 

In the Med, levels have been consistent with an underlying strength, making last done become something of a conference rate.  Furthermore, there was enough activity, despite fixing volumes being lower week on week, to allow Owners to justify their demands. Like in the Continent, fixing dates have stretched out this week, offering a chance for current voyages to get underway before refixing happens again. 


MRs have continued to ride the coattails of the Handies in both regions this week, as full stem enquiry has remained somewhat mute. This was only inevitable, however, as the tonnage list in both regions come Monday presented more in terms of availability than for Handies. Although a fresh, public test is needed for 45kt enquiry in both sectors to eliminate the ambiguity around market levels, Owners’ confidence remains high on next done negotiations, whilst the surrounding markets trade firm. 


As we have said throughout this week, with excitement being seen in both smaller and larger surrounding sectors,  this area should see some of the benefit spill over.  That said,  as yet we haven’t seen any tests occuring.  Theorising what may happen,  with the US levels firming significantly, this is making a ballast to the US look extremely attractive;  alternatively, with the perpetual ceiling from the Aframaxes being lifted,  Owners will be able to push on without a great deal of resistance.

Dirty Product Tanker Spot Rates (WS)

Rates & Bunkers

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

wk on wk changeOct 12thOct 5thLast Month*FFA Q4
TD3C VLCC AG-China WS+1653373759
TD3C VLCC AG-China TCE $/day+21,25028,5007,2505,00042,500
TD20 Suezmax WAF-UKC WS+361097371101
TD20 Suezmax WAF-UKC TCE $/day+24,00044,75020,75016,25043,750
TD25 Aframax USG-UKC WS+8219811599169
TD25 Aframax USG-UKC TCE $/day+32,75052,75020,00010,75045,000
TC1 LR2 AG-Japan WS+10150140143
TC1 LR2 AG-Japan TCE $/day+3,00034,00031,00030,750
TC18 MR USG-Brazil WS+9224243180219
TC18 MR USG-Brazil TCE $/day-4,50030,00034,50018,50031,750
TC5 LR1 AG-Japan WS+13169156170177
TC5 LR1 AG-Japan TCE $/day+3,00028,25025,25028,25033,750
TC7 MR Singapore-EC Aus WS+9252244255249
TC7 MR Singapore-EC Aus TCE $/day+1,00031,00030,00031,25033,000

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

Bunker Price s ($/tonne)

wk on wk changeOct 12thOct 5thLast Month*
Rotterdam VLSFO  -5596601619
Fujairah VLSFO  -19636655651
Singapore VLSFO  -24647671659
Rotterdam LSMGO  -34859893970

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