Trouble in Tehran

Following two weeks of unrest, the oil market is again focused on Iran after a period of relative calm since last summer’s 12‑day war. At the time of writing, the government appears to have quelled much of the unrest. Even so, the threat of potential US strikes, deep public dissatisfaction, disruption to Black Sea exports, and ongoing developments in Venezuela have kept the oil and shipping markets on edge. It remains difficult to predict the outcomes in the event of a US attack, a major escalation of protests, or regime change.

In the near term, the biggest risk is an attack against Iran. The Islamic Revolutionary Guard Corps has stressed that any attack would trigger widespread retaliation across the region. The primary threats remain disruptions to flows through the Strait of Hormuz and attacks on regional oil infrastructure, whilst a strike could also prompt the Houthis to resume Red Sea attacks on shipping. In such a scenario, insurance premiums and freight costs would likely rise to reflect higher regional risk.

It is also impossible to ignore the risk that a regime change might have major implications for oil production. Despite intensifying sanctions pressure, Iran remains a major oil supplier. According to FGE, last year the country pushed total oil output to 5.18 mbd (3.64 mb/d crude, 0.80 mb/d condensate and 0.73 mb/d NGLs) – the highest level seen since the 1970s. As with Venezuelan barrels, Chinese independent refiners are most exposed to any disruption, with almost all Iranian crude exports supplied to China. If Venezuelan and Iranian availability tightens further, these refiners would be forced to seek alternatives, likely boosting demand for Russian and mainstream crudes.

Conversely, a regime change or rapprochement with Washington could lead to a normalisation of Iranian exports. Whilst it could take years for such a scenario to materialise, the impact on tanker markets could be profound. At the peak of sanctions relief in 2017, Iran exported over 2.5mbd of crude to international markets, compared to an estimated 1.5mbd last year, mostly to China. In the event of sanctions relief, Iranian crude is likely to quickly return to India, Europe and the Mediterranean, as well as South Korea and other major Asian economies. Whilst Iran has plenty of ships at its disposal, most of these ships would not meet the vetting standards of mainstream buyers, prompting a shift back to conventional tonnage. Gibson estimates under a modest scenario of 2mbd of exports, sanctions relief against Iran would generate demand for 25 VLCCs and 20 Suezmaxes, assuming trading patterns similar to 2018.

At present, the Islamic Republic is the second-largest user of dark tonnage overall, with roughly 20% of the dark fleet engaged in Iranian trades. For VLCCs however, it is the largest dark fleet player. Of the approximately 200 dark VLCCs, almost all are supporting either Iranian or Venezuelan exports. Taking account of recent developments in Venezuela, rapprochement with Iran could finally lead to the largescale removal of these ships from the global oil supply chain to the benefit of the compliant tanker market.

Events in Iran therefore have the potential to lead to a seismic shift in tanker markets, however, only time will tell whether the status quo is maintained, or the US continues to ramp up the pressure on the Islamic Republic. Yet, with geopolitics rapidly shifting and the US shifting tactics from tariffs and sanctions to military means, all bets are off as to how the situation evolves over the course of 2026.

Iran Exports (kbd)

Crude Oil

East

The AG VLCC market opened the week with a steady flow of enquiry, as charterers returned to the market looking to complete third-decade coverage. Sentiment remained firm throughout, with continued enquiry helping to gradually thin the tonnage list. Following a busy spell earlier in the week, the pace of visible enquiry slowed, although underlying interest persisted under the radar. Freight levels held firm, supported by a strengthening Atlantic market, providing additional confidence to owners. Midweek, Basrah stems were released and owners showed increased resistance, allowing rates to firm further. The attraction of the US markets also drew a number of vessels to ballast westwards, tightening availability in the AG. Toward the end of the week, some activity continued with early February stems starting to be covered. However, enquiry became more selective as freight levels rose, with charterers showing some hesitation. Overall, the week closed with rates getting firmer and the AG market well supported by tightening tonnage and positive sentiment.

The Suezmax market in the East firmed up this week, largely off the back of what is happening in the West, more so than high levels of activity. For Basrah/West today rates are around 140 x ws80 via C/C. With VLCCs absolutely booming we have started to see more trickle down onto the Suezmaxes and expect rates for an East run to be about 130 x ws170.

Asia Aframax rates surged around WS20 points since the start of the week, with the TD14 printing WS164, lifting earnings back to the $40,000/day range. With global markets continuing to outperform, East of Suez is expected to catch up and track a similar upward trajectory alongside the larger sectors. Consistent long-haul fixtures northbound and towards Australia significantly trimmed the tonnage list and boosted owners’ confidence. A number of replacement jobs also featured this week due to adverse weather and port delays, adding further support to sentiment. Vancouver continued to attract tonnage for early-Feb loading, with freight hovering around $3m levels. Momentum is expected to carry into next week, with the list likely to remain constrained on the back of rising ton-mile demand. We close the week assessing Indo/Up at 80kt × WS170.

West Africa

The WAF VLCC market saw a fair amount of activity throughout the week, freight levels along with sentiment grew stronger as charterers moved to 2nd decade to find cover. The tonnage list tightened because of ships disappearing to the Americas and surrounding regions. Owners’ sentiment improved as the week progressed, helped by a strong performance in the Americas market. Several vessels were noted on subs or quietly absorbed, making the list increasingly difficult to read and reinforcing the firm tone. Although visible enquiry remained muted, the thinning list provided underlying support to freight levels, and owners continued to hold out in anticipation of a pickup in activity. In conclusion, the week closed with sentiment optimistic and upward pressure on rates supported by tighter availability and firmer trends in surrounding regions.

West African Suezmaxes are super firm this week and we look to go into the weekend with outstanding cargoes still struggling to cover. TD20 today, owners will be pushing for more than last done at 130 x ws167.5. The premium to head East today is around 7.5 points not having moved much, though with such fantastic returns on offer we might see owners more tempted to lock in for longer runs, reducing the premium.

Mediterranean

TD6 has absolutely rocketed this week and getting owners to do a TD6 run for less than 135 x ws250 is likely to prove difficult. With early dates still to cover and a reduced pool of Owners willing to call there the pressure remains firmly on Charterers. Libya/Ningbo hasn’t been super active so it is hard to call, but with what’s happening to rates for shorter runs, we estimate rates today will be around $7.5m.

The week has been one of consolidation for Med Aframaxes in the main. At last week’s close there was the prospect of much higher numbers to come with replacement cargoes outstanding, and this came to pass. WS200 was soon concluded and then over ws220 for replacements and short less desirable voyages. This situation has been compounded by weather delays in ports; but also, Aframax owners are not oblivious to the markets in other sizes and in other sectors witnessing huge volatility. As geopolitical tensions continue to ramp up and Venezuela provides an interesting sub plot with volumes to come, owners even in the Med are looking forward to rates remaining range bound into the coming fixing windows. Furthermore, with February’s program on the horizon the market starts at a much higher price point if the next cycle is looming.

US Gulf/Latin America

The Americas VLCC market saw a steady and improving flow of enquiry over the course of the week, with freight levels stepping up in line giving the firmer tonnes for surrounding regions. A notable increase in rates was recorded early on, setting a more confident tone for owners. Tonnage availability tightened considerably, with a lack of ballasters able to make natural dates. This imbalance left owners well positioned, particularly those already in the region, and encouraged resistance as enquiry continued to filter through. The level of activity remained consistent during the week, with multiple fixtures and failures reported, making the tonnage list increasingly difficult to read. Despite some volatility, freight levels held firm into the end of the week, supported by limited supply and sustained interest. Overall, owners remain in the driver’s seat, with hopes that the pace of enquiry will carry forward into the coming sessions.

North Sea

The Aframax market here had its lid kept on until mid-week despite certain owners trying to push. Delays in Gdansk and other ports upset the standard flow of the North Sea, allowing those with safe berthing to capitalise. Once things tightened up, we saw the inevitable push with x-NSea fixing ws155 levels. Action took somewhat of a break today but there could still be opportunity with continued ballasters looking for lucrative returns from the states market leaving the local fleet on the short side.

Crude Tanker Spot Rates (WS)

Clean Products

East

A mega week for the LR1s and LR2s. Product has been quoted aplenty both on and off the market. For charterers, owners, and brokers trying to keep up with last done has been the challenge! However, across both sizes rates have really pushed and there is consensus that there is more still to come. TC1 at 75 x ws220 with west (via Cape) circa $4.75m. TC5 at 55 x WS230 and west (via Cape) at $3.8m. Expect next week to see the first decade stems being widely quoted as charterers look to cover ahead where they can. There is however, one elephant in the room: the political situation in the Middle East has the potential to cause sever disruption should it worsen. Time will tell and all eyes wait to see what could happened (if anything) over the weekend.

A progressively firmer week for AG MRs, supported by a tight list and improving sentiment as anticipated 20–25 Jan cargo volume approached. Early in the week, rates were slow to react, but confidence built as availability remained limited and strength in the LR1 and LR2 markets pushed into the MR space. Midweek saw rates begin to correct, with TC12 lifting to WS200 and TC17 pushing into the WS250s. Rates continued to rise in the end part of the week, with sustained enquiry and prompt tonnage driving TC17 up to WS290, with owners testing higher levels, and cargoes still to cover heading into the weekend.

UK Continent

A week of external pressures has seen MR sentiment on the UKC shift around but the outcome ended up being a moderation in rates. UKC-TA was concluded at 37 x ws120, WAF 37 x ws175, Brazil 37 x ws160, Yanbu at lumpsum $1.255m and Argentina at lumpsum $1.5m. All routes were tested this week, and all routes are now trading on 2026 flats. Of note is that UMS is working TA again, so if we see a repeat of this week and any increase in volume on any one route then we will likely see an uptick in rates. This is due to the list remaining limited to laden tonnage, which has been creating an itinerary headache for both owners and charterers with the working window consistently tight. The general feeling is more one of owners trying to exit the region rather than really trying to push rates, as there just has not been the volume there to do that. 

UKC/MED Handy runs have been the catalyst for a rate improvement this week with 30 x ws160 paid ex-Klaipeda and 30 x 157.5 ex-ARA. There has been a lack of MED willing units in the fixing window, and we have even seen some lean on MRs to get their cargoes fixed. TC23 just continues to lack consistent volumes but the tonnage list is tight, so we are expecting freight to hold its value around the 30 x ws167.5 mark for now. Weekend break is coming at a good time and should see a few more units firm up when we are all back at our desks come Monday.

Med 

The main components for this Med MR market this week have been both an active Handy market and an attractive USG market. The allure of TC14 meant we saw a fair amount of ballast tonnage ex-WAF head TA. Thus, the MR list throughout the week has remained incredibly tight consequently leaving any natural Med players in prime position. However, due to a lack of TA enquiry any owners willing to go short could kill time on 30KT clips due to high Handy rates. Of the minimal TA numbers we have seen, WS130 has been repeated, and the less desirable Med-WAF and Med-UKC moves have paid up on the usual differential with ws175 and ws147.5 respectively seen. All eyes are on how the list shapes up on Monday and the levels of enquiry next week to see if this market moves.

It has been a tale of two halves for Med Handies. We opened the week at the 30 x ws155 mark with bad weather stressing itineraries and an influx in enquiry, which would go on to give owners the confidence to mount a push on rates, with grade sensitivity also playing its part. Owners became bullish as we reached a peak of ws250 levels which was repeated with rumours of 25 points more also going on subs. However, with the bad weather subsiding, tonnage being replenished and a handful of MR stems killing time on 30kt clips, it was a fleeting high for owners. We have since seen ws210 out of a less tight WMed and ws220 on a jet stem, and ws200 ex-Sines for XMed go on subs. Looking forward, as charterers regain some authority in this market, if they are mindful of the long game and stagger enquiry, we could see this downward pressure build and rates further correct down after an already healthy looking list is replenished come Monday. 30 x ws200 and pressured.

Clean Tanker Spot Rates (WS)

Dirty Products

Handy

Handies in the UKC have seen a rather slow week as enquiry was sluggish to surface. levels softened as we saw ws242.5 clipped away for a prompt replacement early into the week marking a 2.5 point drop in levels before softening further to ws240 before activity helped to clear some units from the list leaving a steadier feel by the weeks end. We expect to see a handful of vessels ready to work off early dates next week where owners will be hoping for a fast start to proceedings if levels are to hold.

The Med has seen a quiet week and as a result rates have suffered. WS2026 finally came into effect and with it an expected lowering of the current rates in the market. ws225 was initially fixed basis the new flats before quickly softening again to ws220, which is where current levels are holding for now, following an end of week clear out of the remaining prompt positions. We expect to see some replenishment showing on the list with owners not quite out of the woods just yet.

MR

MRs in the North saw a quieter week following last week’s activity as units were cleared out. However, a couple of dealings kept availability tight with owners pushing levels back upward and a deal reported at WS177.5 X-UKC. Owners are looking to push on further should full stem enquiry continue to surface early into next week. The Med saw another quiet week for full stem activity with this sector in need of a well-publicised fresh test. The list does look tighter off early positions but so far this is yet to shift sentiment with rates we expect between the ws175-180 mark.

Panamax

TD21 has gone from strength-to-strength this week as enquiry continues to flow into an already tight list and charterers reach forward on dates. Sentiment here remains firm with some expecting to see rates hit the WS300 mark. Surrounding markets speculate on the additional Venezuelan liftings which Panamax owners will hope to see some trickle-down effect from. Over on this side of the Atlantic, units are scarce until early Feb, but we don’t expect owners to hang around with a booming USG market. Rate ideas here we think are between 55xWS130-135 but need to be tested.

Dirty Product Tanker Spot Rates (WS)

Rates & Bunkers

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

wk on wk changeJan 15thJan 8thLast Month*FFA Q1
TD3C VLCC AG-China WS3811274126105
TD3C VLCC AG-China TCE $/day43,250102,75059,500128,25088,750
TD20 Suezmax WAF-UKC WS38166128126144
TD20 Suezmax WAF-UKC TCE $/day23,00081,25058,25059,75061,000
TD25 Aframax USG-UKC WS28249221198214
TD25 Aframax USG-UKC TCE $/day9,00069,50060,50055,50051,500
TC1 LR2 AG-Japan WS35216181155 
TC1 LR2 AG-Japan TCE $/day11,25057,00045,75040,500
TC18 MR USG-Brazil WS-4229233208189
TC18 MR USG-Brazil TCE $/day-1,25029,50030,75028,75020,250
TC5 LR1 AG-Japan WS36227191179198
TC5 LR1 AG-Japan TCE $/day8,25042,50034,25034,25033,500
TC7 MR Singapore-EC Aus WS21254234238228
TC7 MR Singapore-EC Aus TCE $/day3,00031,50028,50031,50026,000

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

Bunker Prices ($/tonne)

wk on wk changeJan 15thJan 8thLast Month*
Rotterdam VLSFO  +42437395396
Fujairah VLSFO  +30444414416
Singapore VLSFO  +20440420429
Rotterdam LSMGO  +49648599611

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