Tankers learn to Tango

Argentina has turned into one of the biggest growth stories in oil production globally. Home to the world’s fourth largest shale oil reserves, the country has long struggled to properly exploit its resources. In recent years, rapid economic and fiscal reforms have enabled investment and production to take off. We covered this progress in our report last year, at which point shale oil production stood at around 300 kbd. This year has seen production rise to 450 kbd, revealing the rapid pace of development taking place. Total oil production is expected to average 890 kbd in 2025, increasing steadily to 1.3 mbd by 2030, of which 900 kbd will be light tight oil, whilst conventional supply will decline over the same period.

Though Argentinian oil demand is projected to grow throughout the rest of the decade, production growth will outpace it by far, thus earmarking most of this new supply for export. So far this year, average crude exports have increased from 120 kbd to 170 kbd, with nearly half of these barrels carried on Aframaxes. Suezmax loadings are expected to rise in the second half of the year, as the Puerto Rosales crude oil loading facility is expanded to accommodate Suezmaxes. In fact, the port saw its first Suezmax cargo loaded this week, and further exports on Suezmaxes could pressure Aframax market share going forward. Currently, over half of seaborne exports are shipped to the USWC, with Honolulu and Long Beach the most prominent ports. Longer haul distances will become more economical as Suezmax capacity is expanded.

Late last year, YPF announced that the Vaca Muerta Norte pipeline was completed, enabling 160 kbd of shale oil to be transported to the Lujan de Cuyo refinery in Mendoza (105 kbd). It also connects to the Trans Andean (OTASA) pipeline, connecting Medanito grade crude to ENAP’s 116kbd Bío Bío refinery as well as the Pacific Ocean. In theory, this would allow Argentinian crude to be exported from San Vicente (Concepcion) to global markets, however, no cargoes have been exported to date.

In the longer term, the 600km Vaca Muerta Sur Pipeline connecting the Vaca Muerta shale field to Punta Colorada port in the Atlantic Basin is being constructed to help facilitate further increases in exports. Supported by a variety of major operators including YPF, Chevron, and Shell, nameplate capacity for the pipeline is set at 550 kbd, with already contracted capacity recently reported at 280 kbd. In late 2026, the first phase of the pipeline will be able to transport 180 kbd, expected to be ramped up to 550 kbd in 2027, with expansion to 700 kbd possible if necessary. Notably, the Punta Colorada loading terminal will be equipped with two single point moorings designed to accommodate VLCCs.

This rise in exports will need to find outlets in crude markets globally. With global demand growth projected to be centred in the East throughout the rest of the decade, this likely means most additional Argentinian supply is destined for long haul export. Moreover, the Atlantic Basin is facing oversupply when it comes to light oil grades, which may further complicate finding short haul outlets.

Overall, the country will grow to be a notable crude exporter by the end of the decade, providing welcome support to tonne mile demand for crude tankers. Currently around half of crude exports are carried on Aframaxes, which may see a significant shift to Suezmaxes in the near term. VLCCs will begin to take market share once the Punta Colorada loading terminal is upgraded to handle this vessel class from late 2026 onwards, if there are no delays.

Argentina Crude Production

Crude Oil

East

As the week began, VLCC enquiry in the AG was slow to materialise as charterers maintained control over the pace of activity for first decade August stems. When they did step into the market, they had optionality with a well-stocked tonnage list. Market sentiment was under pressure and there were expectations of a downward adjustment in rates due to the backlog of ships needing to be cleared. As the week progressed, on the surface activity remained limited and when fresh cargoes did appear, charterers were able to attract a healthy number of offers. Looking ahead to next week, there is some hope that enquiry will pick up as we mainly turn our attention to second decade of August. Today we are calling AG/East WS46 & AG/USG WS30.

The Suezmax markets in the East have remained stable throughout the week, with more ballasters committed. Owners will be looking to push rates above 140 x WS47.5 via C/C. Rates to head East also remain steady but with some potential to push above 130 x WS95 next week.

Aframax activity in Asia saw intermittent bursts of enquiry, which briefly lifted sentiment but ultimately failed to push rates higher. Fixtures held around last done levels with an Indo/Oz run concluding at 80 x WS110 on an oil relet. The front end of the list has tightened, helped by westbound ballasters and an active MR sector pulling in Aframaxes for part-cargoes, but overall supply remains sufficient for the natural fixing window, with relets continuing to feature. However, with first decade positions covered and the upcoming fixing window yet to open, sentiment remains flat for now. We expect a relatively steady start to next week unless a fresh wave of regional or long-haul stems emerges to test, and if part-cargo demand from the MR segment continues.

West Africa

The West Africa VLCC market experienced a limited amount of activity this week, with only a handful of reported fixtures. Rates continued to come under pressure, weighed down further by softening sentiment in adjacent markets. Although enquiry levels had improved as the week progressed, momentum was not able to build here. The tonnage list remains well populated, offering charterers varied choice when they do decide to enter the market. Today we are calling WAF/East WS48.5

West African Suezmaxes fell away to WS77.5 for a TD20 run, though owners will be feeling a little more optimistic with rates holding from CPC giving those in the West Med an alternative. The premium to head East remains around WS10 points with a number of ballasters from the East available to pick off.

Mediterranean

Coming into the week with sentiment on Aframax at a high, the mood soured a tad as the days ticked by. Although tonnage was being kept from the lists with Trieste and Fos/Genoa (to a lesser extent) still reflecting delays, cargoes were also being delayed coming to market. Azeri reportedly suffering issues with Organic Chlorides, Libya has also suffered with slow production at both Fawrah & Bouri. With what little requirement subsequently followed, charterers found numbers to be progressively more competitive. Finishing the week WS5-7.5 down from where we began, the wind hasn’t totally fallen from the sails but with the continent and US markets also in the doldrums, signals point towards more of the same heading into next week.

US Gulf/Latin America

Like the adjacent markets, fresh enquiry was slow to emerge in the Americas VLCC markets. Fixing was taking place however not enough for any sort of momentum to really build. Moving through the week a few fixtures had failed which added further pressure to sentiment. The tonnage list for now is balanced with a mixture of eastern ballasters / ships opening in the West. The Brazil export market also faced difficulty with a lack of enquiry, the fixing that did take place showed some weakness in the market as levels edged further downwards. Today we are calling USG/East $7.00M & Brazil / East WS47.

North Sea

A busier second part of the week for Aframaxes with several units being snapped up for end month stems. Rates still fail to impress but this is understandable for the end of July. We are now holding around WS115 with a fair few owners opting to look at Med business as the preferred alternative with returns more lucrative, at least for now. TA attracts some but perhaps not to the extent of recent movement.

Crude Tanker Spot Rates (WS)

Clean Products

East

A very busy week for the LR2s. The front end has really tightened up as charterers covered quickly and quietly. $3.75m on subs a couple of times for West and TC1 at 75 x WS130. Expect the close of the week to be taking stock of this week’s activities and monitoring how many ships get their subjects. As the next fixing window approaches charterers will want to assess just how tight the lists or if there could be a little breathing room. The LR1s have been retested this week with the slightly older and last cargo UMS history units clearing away the cargoes. West at $3.0m and TC5 at 55 x WS150 levels. Still units left on the list, but certainly less pickings which will require charterers to think a little should they have a cargo with specific requirements.

It’s been a busy week for the MRs here in the AG with good enquiry throughout and an ever-tightening tonnage list. Despite this however rates have remained flat for the best part of the week with TC17 trading at 35 x WS225-230 and TC12 at 35 x WS170. At the time of writing there is little left to cover but with the list still tight for end/early dates owners will be positive they can start to push levels next week.

UK Continent

The ever-evolving tidal ebb and flow of MR tonnage to and from the UKC reached a tight point this week where the void of ballast units has pushed rates back up. The dynamics have so many push and pull factors involved and with the USG now rallying again, owners are once again keen to go TA to capture rocketing rates. The UKC rates are more positive for owners but largely still at the very bottom of desired earning levels. August can be a quiet month, and this year has all the hallmarks of a slow one. Weather related factors in the Atlantic still to be watched. A lot of moving parts to the Atlantic dynamic, this doesn’t look set to change.

A steady influx of cargoes has been quoted this week in the North on Handies as levels hovered around the 30 x WS155 for XUKC. Higher was paid for a replacement however as the week rolled on that failed and freight settled back to last done. There was a slight improvement seen on MR long-haul freight which thankfully for Handy owners meant that MRs no longer acted as a cap for 30kt clips. Feels like a happy medium has been reached now between both parties but the tonnage list still does lack depth so it wouldn’t take many cargoes for a push to come. Sideways for now though.

Med

What started as a lackluster week has progressed into a relatively active one for MRs in the Med. The main talking point being MR’s competitiveness on handy stems XMed. Charterers quickly caught on to this in order as we have seen an increase in cargoes being quoted in the 30kt-37kt range. Still the list remains tight in the prompt window so any urgent requirements for a TA run will most likely yield higher than current levels despite opening up next week. There is also an element of grade sensitivity seen with last done sitting at 37 x WS140 for a Med-TA run on a naphtha stem and another naphtha stem on subs at 37 x WS125 Med-UKC for 03-05 August dates. 37 x WS130 Med-TA seems a fair call when accounting for minimal available tonnage but some further testing is needed to see where true levels lie.

An active week for Handies in the Med which started the week in a somewhat divided market with rates being load port dependent. The list remained tight throughout the start of the week which coupled by an increase in inquiry saw a jump from 30 x WS165 to 30 x WS190 levels. Rates now sit at the 30 x WS180 mark for TC6 with a slightly better stocked tonnage list, thus, the claims of a toppy market which began yesterday may materialise in due course. One notable factor is the element of rates now being capped by MRs. With MRs remaining competitive on Handy stems and taking on 30kt cargoes it seems some vigour has been sucked out of Handy rates. This slowdown in momentum has potentially caused some owners to jump the gun as seen in the few 30 x WS170 fixtures we saw near week’s end. However, looking forward to next week it would come as no surprise if some downward corrections were seen, just how far that could go is unknown for now.

Clean Tanker Spot Rates (WS)

Dirty Products

Handy

Handies in Northwest Europe have seen a positive week for owners as enquiry quickly flowed into the market clearing units from what was already a favourable list for owners. Relets were kept busy and tonnage was clipped away with repetitions of WS237.5, leaving the market poised for WS240. However, owners will have to wait for this as enquiry faded just as tonnage became scarce. The list is left tight with would-be Wmed ballasters making up the lion’s share of the list. TD18 prints at WS242.5, signalling a consensus in the market that levels look likely to firm up into next week.

The Mediterranean saw an overall steady week with levels repeating at WS 240 on a consistent basis. Enquiry managed to surface just enough to keep the list ticking over. West Med looks tighter where we feel owners will look to hold the line, but over in EMed, tonnage has begun to creep its way up the list, and with additional units set to open at the weekend, we think levels here will come under pressure and soften early next week.

MR

MR owners in the North will be heading into the weekend rather pleased with the week’s proceedings for the most part, as enquiry surfaced just in time to avoid what could have been a handful of well-approved units opening within the same fixing window. Levels repeated at 45 x WS165 twice and with additional tonnage heading into programme, the list quickly tightened, leaving owners keen to test up toward 45 x WS170 on next done.

Unfortunately for owners in the Med, the same can’t be said for activity. Despite this, rate ideas have stayed at a consistent 45 x WS170 throughout the week as MR tonnage has been relatively tight. Owners here have found employment via Handy stems and part cargoes, keeping availability in check. The market awaits a fresh test, but we expect to see 45 x WS170 fixed as things stand on next done.

Panamax

Local Panamaxes over in Europe have seen little to get excited about as enquiry stays underground. Rate ideas are to be tested but we feel next done will fall within the 55 x WS110-115 range. Over in the Caribs/USG regions, levels saw a continuous slide in rates with TD21 printing at 50 x WS146.67 by close of play on Friday. Next up tonnage has been clipped away leaving next done likely to tick up toward WS150 but overall, we expect to see levels hold steady here for now, plus or minus 5 points.

Dirty Product Tanker Spot Rates (WS)

Rates & Bunkers

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

	wk on wk change	Jul 24th	Jul 17th	Last Month*	FFA Q3
TD3C VLCC AG-China WS	-7	46	53	76	53
TD3C VLCC AG-China TCE $/day	-3,500	25,250	28,750	59,750	29,000
TD20 Suezmax WAF-UKC WS	-12	77	89	90	80
TD20 Suezmax WAF-UKC TCE $/day	-5,500	24,250	29,750	31,750	24,000
TD25 Aframax USG-UKC WS	-5	120	125	143	133
TD25 Aframax USG-UKC TCE $/day	2,500	23,000	20,500	31,250	23,750
TC1 LR2 AG-Japan WS	3	128	125	211
TC1 LR2 AG-Japan TCE $/day	5,250	28,500	23,250	56,750
TC18 MR USG-Brazil WS	28	190	162	190	172
TC18 MR USG-Brazil TCE $/day	7,500	23,750	16,250	23,000	18,500
TC5 LR1 AG-Japan WS	7	150	143	218	146
TC5 LR1 AG-Japan TCE $/day	4,250	24,500	20,250	41,000	21,500
TC7 MR Singapore-EC Aus WS	-1	196	197	216	183
TC7 MR Singapore-EC Aus TCE $/day	1,000	22,250	21,250	25,000	19,000

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

Bunker Prices ($/tonne)

	wk on wk change	Jul 24th	Jul 17th	Last Month*
Rotterdam VLSFO	-7	499	506	525
Fujairah VLSFO	-5	501	506	550
Singapore VLSFO	-1	511	512	560
Rotterdam LSMGO	+17	720	703	724

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Tankers learn to Tango

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