Contents
Table of Contents
Cash Cow
In December 2023, when the newly elected Xavier Milei took the oath as the Argentinian president, the country was reeling under hyper-inflation, which stood at 133.5% annually. Whilst Argentina’s new president has been anything but quiet as he seeks to rejuvenate the economy, the country’s oil and gas sector has been making quiet progress towards boosting production and exports.
In the Vaca Muerta, home to the continent’s largest shale formation holding the world’s second largest shale gas and fourth largest shale oil reserves, crude oil production recently reached around 300,000 bpd. Plans are currently underway to boost this to 1 million bpd by 2030, supported by tax breaks for investments of over $1 billion, and import duty exemptions on equipment designed to support exploration and production.
State-owned oil producer YPF has now started to build a $2.5 billion crude oil pipeline, connecting the Vaca Muerta shale field to Punta Colorada port in the Atlantic basin. The Oil & Gas Journal reports that construction of the first 130 km of the planned 600-km line has commenced. It is expected to transport 180,000 bpd by 2026, and eventually reach 400,000 b/d in 2030. The loading terminal will be equipped with two single point moorings designed to accommodate VLCCs.
The IEA estimates that light tight oil (LTO) supply from Argentina is set to rise by 520,000 bpd from 2023 to 830,000 bpd by 2030, helping to increase total output to 1.2 million bpd. Argentinian crude imports are negligible, thus a rise in domestic production is projected largely to head for export. Seaborne crude exports have been steady at just over 100,000 b/d over the past 2.5 years and are mainly transported through Aframax, Panamax and Suezmax vessels to the USA and Brazil, albeit with some unusual flows to the UAE. The past 6 months saw a surge in Aframax loadings, increasing their market share from 4% last year to nearly 30% so far in 2024, which is again mainly transported to US refineries. Further changes are likely, with VLCCs gaining market share once the Punta Colorada pipeline commences its operations.
Expanding crude production in Argentina has largely gone under the radar, and the country is unlikely to challenge the big crude exporters in the same way the US has done following its own shale revolution. Current production plans suggest that the country could make it into the top 20 exporters by the end of the decade with much of the output destined for Asia. As such, whilst these developments will be welcome news for the VLCC sector in particular, they are unlikely to be transformative.
Argentinian Crude Exports (000 bpd)
Crude Oil
East
VLCCs in the AG have faced a rather uneventful week. Charterers looked to cover the remaining 3rd decade stems, however, the tonnage list has remained well stocked allowing ships to be picked off at desirable levels. Today we are calling 270 AG/China WS46 and 280 AG/USG at WS32.
Suezmax rates in the region have been consistently getting chipped away at, with sentiment sitting on the weaker side, as the larger sizes continue to get involved and Suezmax Owners await Basrah dates. With Owners still looking at opportunities to clean ships up there is only so far TD23 can be pushed which we now estimate at 140,000mt x WS62.5 level via C/C.
West Africa
The WAF VLCC market has experienced a lull in market activity this week, however, under the radar this region has seen a decent flow of interest for ships willing short options which is helping to tighten the front end of the tonnage list. In today’s market we estimate that the current rate for WAF/China should be around WS51.5.
The West African market remains steady for now on Suezmaxes though the VLCCs continue to put pressure on the market as fixing dates align this month. It’s likely the list will remain healthy this coming Monday, as the USG took a knock on sentiment overnight. Charterers are likely to look to chip away at TD20 with it likely to pay around WS97.5 today.
Mediterranean
TD6 remains steady at around 135,000mt x WS120 with limited enquiry this week that will hopefully pick up as dates get released. Rates to head East were tested this week and are steady at a level of $5.0M for Libya/Ningbo run via the Cape.
The mid year lull is upon the Med Aframax sector with all parties seemingly ready and willing to trade at last done levels. Adding to the inability of Owners to capitalise on a tightish Med list, was the eventual resumption of work by Fos tugboat employees and thus more tonnage came available as the week progressed. Consequently, the conference levels of WS150 for Ceyhan and WS160 for CPC loaders were achieved a number of times, and with rates on offer at around WS92.5 levels to leave the region and head to the Gulf. As we approach the close of play for the week, we anticipate no sea change into the next fixing period.
US Gulf/Latin America
The USG VLCC market started slowly this week, because of closures around Houston due to hurricane Beryl. As we moved through the week the Atlantic basin had a handful of cargos working, however, this led to further chipping away at rates which had been supported by well placed tonnage and a lack of activity in the surrounding regions. The Brazil export market saw another quiet week with only a couple of stems working. One market cargo was able to achieve a healthy amount of offers which gave Charterers an opportunity to apply pressure on freight levels. We expect a USG/China run will fix in the region of $7.30m while we estimate a Brazil/China run is paying around WS50.
North Sea
Despite the weather, it has been a typical summer week for North Sea Aframaxes with attitudes to the market all pretty equal. Levels are flat trading at WS127.5 with nothing to suggest that we will be going North of WS130 any time soon. The near end of the list doesn’t hold a huge amount of choice but for the natural window there is still ample tonnage. We can see levels coming off further at the start of next week.
Crude Tanker Spot Rates (WS)
Clean Products
East
A busier week on LR1s has left a shortage especially for Westbound runs. Rates have quickly breached $5.0 million and we are now seeing LR2 rates asked by the handful of Owners willing in that direction. Add to that consistent short volume and the LR1s are pushing on generally. TC5 is overpriced against LR2s at WS220 and cargoes must more and more be stemmed up to take advantage. LR2 Westbounds have softened down to approach parity on the LR1s at around $5.7 million. So where a Charterer can, they will use the bigger tonnage. But where port restrictions prevent such upsizing, LR1s may see even higher rates paid. Overall, the focus has to now rest on the LR2s and we should see them busier into the new week with rates stabilising and then an upswing fairly quickly.
MRs east of Suez have faced another week where Owners have been forced to take what’s on offer largely at last done levels. A lack of activity – both on and off market – has kept the top of the list ticking over but the natural window is well stocked. TC17 has hovered around the WS245-250 mark with a Duqm outlier achieving a premium. TC12 dropped below the WS200 mark to WS195 from Mumbai and Westbound remains untested. Going forward there is no sign of a swing just yet and with SE Asia soft the potential for Singapore ballasters will also serve to keep a lid on a significant bounce in rates.
Mediterranean
Positive week for the Handies here in the Mediterranean with rates picking up again after a quiet couple of weeks. 30 x WS185 was the call for Xmed on Monday morning but with the list tightening due to an uptick in enquiry from Friday, rates soon started to move with 30 x WS200 achieved by midweek. Since then we have seen some tricky cargoes get caught out with 30 x WS300 on subs for a restricted cargo. At the time of writing vanilla Xmed sits at 30 x WS245 with Black Sea in need of a fresh positive test. Market firm into the weekend.
Finally to the Med MR market where it’s been a slow and steady week with not a great deal of action to report. Rates have traded flat at the 37 x WS175 mark for Med/TA throughout the week apart from 37 x WS182.5 seen ex Sines. WAF activity has been minimal with levels expected to land at 37 x WS195 when next tested. Heading into the weekend there is nothing left outstanding so expect a quiet finish.
UK Continent
A bit of a rollercoaster for the UKC MR sector which started with much hope but after a quiet start to the week, much of this positivity dissipated. With some Owners holding for WS200+ on Monday, we saw enquiry trickle out into the market with limited success from the Owning fraternity and come Wednesday rates were struggling to hold 37 x WS180. Charterers continued to play their cards close to their chests as we see the second half of the week offer some good activity and come Friday we see a good clear out of tonnage. Rates continue to wobble around the 37 x WS175-180 mark but feel Owners have a few more arguments to keep rates stable. A bullish end to the States market should keep ballast tonnage away and if this can continue into next week, then no doubt Owners will start to look to press on last done ideas.
There has been improved demand seen this week for ULSD moving XUKC as a healthy amount of Handies have been fixed for this run. Levels started at 30 x WS165 but as the front end of the list started to tighten, Owners managed to push levels to 30 x WS170. The weekend break will enable a few more vessels’ itineraries to firm so it will be pivotal that Monday kicks off on a busy note.
Clean Tanker Spot Rates (WS)
Dirty Products
Handy
It’s been another quiet week across both the North and Med as the summer markets continue to mute activity. In the North, tonnage continued to build and levels eventually softened with WS295 reported on subs by the end of the week. Looking to next week, tonnage looks likely to build further and with no sign of a return to normal levels of enquiry, further softening looks likely.
The Med saw a similar week to the North, with limited activity and most fixtures carried out off-market with limited information shared. Tonnage in the Med is mainly focused around the West as a handful of units here look offer for UKC loads and if called upon, alleviate some of the negative pressure in the Med. For now, levels sit at the WS230-235 but as trading starts next week, Charterers will look to test these further.
MR
MRs have suffered a mix of emotions in the North and the Med this week as owners have continued to throw offer for part cargos. Levels have softened to WS200 since last week in the North, mainly due to pressure from West Med ballasters. In The Med, full stem enquiry has remained elusive as part cargoes continue to be the main source of employment. Despite this lack of full stem activity, levels currently sit at WS equivalent of 155 and are yet to find a floor.
Panamax
Another quiet week for Panamaxes in the Cont and Med with little by way of enquiry or questions over availability. More units are set to open by the end of the second decade leaving charts in a position to test levels and beat last done should enquiry surface. Across the pond over in the Caribs, the firming of surrounding Afra markets could cause Charterers to look to Panamaxes as a more attractive option. Levels appear to have found their floor at the WS165 mark.
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 11th | Jul 4th | Last Month* | FFA Q3 | |
| TD3C VLCC AG-China WS | -2 | 47 | 48 | 51 | 53 |
| TD3C VLCC AG-China TCE $/day | -1,750 | 21,000 | 22,750 | 28,250 | 23,500 |
| TD20 Suezmax WAF-UKC WS | -1 | 99 | 100 | 114 | 95 |
| TD20 Suezmax WAF-UKC TCE $/day | -250 | 36,750 | 37,000 | 47,000 | 29,500 |
| TD25 Aframax USG-UKC WS | +11 | 183 | 171 | 229 | 170 |
| TD25 Aframax USG-UKC TCE $/day | +4,250 | 45,250 | 41,000 | 63,250 | 36,750 |
| TC1 LR2 AG-Japan WS | -9 | 173 | 182 | 201 | |
| TC1 LR2 AG-Japan TCE $/day | -3,000 | 41,250 | 44,250 | 52,250 | |
| TC18 MR USG-Brazil WS | -56 | 226 | 282 | 213 | 226 |
| TC18 MR USG-Brazil TCE $/day | -11,000 | 28,750 | 39,750 | 27,000 | 25,250 |
| TC5 LR1 AG-Japan WS | -11 | 216 | 227 | 229 | 200 |
| TC5 LR1 AG-Japan TCE $/day | -2,750 | 38,500 | 41,250 | 43,000 | 32,000 |
| TC7 MR Singapore-EC Aus WS | -25 | 267 | 292 | 319 | 260 |
| TC7 MR Singapore-EC Aus TCE $/day | -4,250 | 32,500 | 36,750 | 42,750 | 28,000 |
(a) based on round voyage economics at ‘market’ speed, eco, non-scrubber basis
Bunker Prices ($/tonne)
| wk on wk change | Jul 11th | Jul 4th | Last Month* | |
| Rotterdam VLSFO | -16 | 571 | 587 | 543 |
| Fujairah VLSFO | -12 | 623 | 635 | 595 |
| Singapore VLSFO | -12 | 622 | 634 | 593 |
| Rotterdam LSMGO | -22 | 734 | 756 | 731 |
