Fielding FPSOs

Floating production storage and offloading platforms (FPSOs) are having somewhat of a renaissance. After a challenging covid period higher oil prices carried with it a larger orderbook for FPSOs, several of which are due to be delivered this year. FPSOs allow flexibility in deployment and give cost advantages over traditional production infrastructure, and notably, are currently mostly being deployed offshore, relying on tankers for further transport of oil.

Guyana is this decade’s poster child of the successful use of FPSOs. Since late 2019 three FPSOs have been installed off the coast of Guyana, Liza Destiny (120 kbd) and Liza Unity (220 kbd), followed by Prosperity (220 kbd), which are mostly responsible for growing the country’s exports to 620 kbd in 2024. Of this output, around 500 kbd was carried on Suezmaxes, and 100 kbd on VLCCs, largely to Asia, Europe, and the Mediterranean. It was reported this week that the One Guyana with a capacity of 250 kbd has left Singapore and is travelling to Guyana, to start ramping up production in Q2 and Q3 of this year, adding a further 100 kbd to oil production over the year. Two more units, each expected to have 250 kbd of capacity, are under construction and scheduled to start production in 2026 and 2027.

Meanwhile, Brazil is looking to mirror this success by bringing four FPSOs, with a total capacity of around 800 kbd online in 2025. These units are slated to contribute 220 kbd of additional supply this year, and most of these barrels are likely to be exported on VLCCs and Suezmaxes as well. As in Guyana, more FPSOs are expected in Brazil for 2026 and beyond, although Petrobras has tempered expectations by announcing additional maintenance and slower than projected ramp up and commissioning of FPSOs Mero 3 and Almirante Tamandare. In the US Gulf, the Mad Dog 2 will bring 140 kbd of capacity online later this year, bringing the total in the Americas alone to seven FPSOs for 2025. With Norway and China as well as several West African countries all adding capacity, and projects awaiting final investment decisions in Namibia and Suriname in the coming years, offshore production and FPSOs are helping to contribute a significant share of supply growth.

The consequences for dirty tanker markets seem positive. However, the key question of where demand for these supply additions will come from remains, with supply growth projected to outgrow demand growth this year, challenging current OPEC+ plans. As previously reported, predicted demand growth in the Far East could give rise to new tonne mile demand for VLCCs and Suezmaxes. The medium grades from Brazil and Guyana have so far offered a welcome alternative for European refiners to the very light US exports. Yet with demand in Europe set to slow this could push barrels East. Recent sanctions on both Russia and Iran have seen more barrels move from West to East, supporting this notion.

Guyana crude exports

Crude Oil

East

A slow start in the AG for VLCCs with most MEG players awaiting Saudi dates to be confirmed. VLCC enquiry began to pick up during the week which started the upwards surge in freight levels. After a busy couple of days, it felt like we were getting close to the top of the market. Following on from this a few deals were done below last done levels and now rates along with sentiment are under pressure. Looking ahead to next week the tonnage list opens up further giving charterers more selection and we could find a few more step out to try and apply further pressure to rates. Today we are calling AG/China WS61 and AG/USG WS34 on 2025 flats.

Suezmaxes in the AG have seen limited enquiry this week and there is a softer feel, though the list isn’t overly stocked with prompt ships. Today for Basrah/UKCM we estimate rates to be around 140 x WS57.5 level via C/C for modern approved tonnage. For East runs, rates have been jumping around a little and reports of 107.5 on subs for a replacement will give owners hope of keeping the market above 130 x WS100 next week.

In Aframax markets in Asia, the week ends on a quiet note as charterers will look to beat last done levels after a replenished tonnage list. TD14 fell from the start of the week to WS114. We expect enquiries to surface for first decade stems and that should show where the Indo market sits. In AG, despite a relatively thin list, charterers have come under little pressure due to limited volume being exported from the region on Afras. The week ends with Ag/East at 80 x WS143.

West Africa

A slow week for VLCCs in the WAF region as fresh enquiry was far and few between. A few deals under the radar and levels pushed up, supported by fixing in the surrounding regions. A fresh TD15 test is needed next week, and with levels easing elsewhere the expectation is for WAF to come under pressure. The tonnage list is tight for early positions so owners could make some progress but looking at natural dates the list opens up. Sentiment in the region is under pressure and today we are calling WAF/East in the region of WS61.

Suezmax markets in West Africa were looking quite strong to start the week but minimal enquiry has started to open the list towards the end of the week. For a TD20, there is still resistance from owners, but it seems likely that we see something done around the 130 x WS90 level soon. 

Mediterranean

Med enquiry was steady in the week but fell away towards the end like WAF. TD6 today owners will be looking to keep rates above WS110 but charterers will be looking to push down to that level. There still seems to be demand for South Korea options this week which will keep owners positive about keeping the supply down. Libya/Ningbo today is steady, and owners will likely be looking to fix around the $5.7M level.

This week in Med Aframaxes, expectations of support from an active cargo base did not materialize, causing any remaining optimism to fade quickly. Additional downward pressures also contributed to softer rates between deals, with reports of a reduced CPC program and an increased tonnage list at the start of the week giving charterers the leverage needed to push the market lower. By week’s end, CPC rates had dropped to WS140, while the Med feathered down to 130-132.5 levels for vanilla runs. With IE week set to begin on Monday, further disruption could reinforce the current market sentiment.

US Gulf/Latin America

In VLCC markets, with public holidays taking place in the USG at the start of the week fresh cargoes were slow to emerge. Levels were steady and with a drop in eastern ballasters levels were expected to push onwards should the enquiry come. A few deals failed which did not help sentiment, but owners will hope for a turn-around next week. The Brazil export market has not been as active as recent times but a few cargoes coming into the region kept spirits alive. Today we are calling USG/China $8.40m & Brazil/China WS59.

Aframaxes in the USG have been busier than recent weeks, but rates have been up-down-up-down settling in to end the week around 70 x WS142.5. A healthy list remains and could push rates sideways to slightly softer for next week.

North Sea

A fair bit of action this week for Aframaxes in the North Sea, shaving plenty from the list and overall leaving a balanced feeling. Bad weather in the Atlantic has kicked up some delays but nothing that can’t be soaked up. Levels still holding around WS110, those with other options are taking the ballast, US markets are helping to give some stability this side of the pond.

Crude Tanker Spot Rates (WS)

Clean Products

East

MRs east of Suez started the week with the lost tight and cargoes to flowed early after a quiet end to last week. EAFR from Duqm saw WS220+ offered and from here a standoff ensued where charterers attempted to take some steam out. We close the week with WS207.5 repeated from the AG and short list of cargoes left to cover.

LR2s saw a busy start to the week and rates started to climb. TC1 was initially up 10 points on the week to WS135 and AG/UKC assessed at $3.6m. But as the week has ended volume has stalled and charterers are happy to hold off for lower numbers. Now we are back to WS130 and $3.3-3.4m. LR1s have remained tight, and owners have pushed rates. TC5 has rapidly risen 12.5 points to WS145 and AG/UKC is very hard to see less than $2.8-2.9m. Lists are short, and volume is steady, so we expect them to keep pressure on.

UK Continent

This week started with MR owners being bullish with some limited restocking of lists giving them a chance to press. 37 x WS165 was seen early in the week for TA but after that, it seemed to all die down with only a couple of WAF stems lingering around. This helped knock the wind out of owners’ sails with 37 x WS155 equivalent paid on Thursday for TA. A few more quiet deals partnered with some reasonable quoting on Friday morning makes us feel this market shouldn’t lose any more points. If Handies help on a couple of XUKC runs, we could find ourselves in a rather tight position once again on Monday. Ballast tonnage is on the horizon from both the States and WAF, but with the Med market this week keeping active as well as some poor weather in the Atlantic, we see more of these ships heading further south towards Gibraltar rather than ARA.

Handies in the UKC remain thin on the ground which in turn has led to limited quoting from charterers not wanting to get caught out. MRs have continued to be an option with both Handy and MR rates fluttering close to each other for XUKC, and we saw most stems covered this week go under the radar. Come Friday a few more outstanding stems looking both sizes remained, but we expect rates to hold steady around the 30 x WS195ish level.

Med 

Handies in the Mediterranean saw activity shooting up early in the week but have since slowed. 30 x WS180 was last done XMed on Monday morning but with prompt cargoes rolled over from Friday and an influx of cargoes rates soon jumped. By midweek we reached heights of 30 x WS235 and with the list tight this number was repeated. Since then, however, enquiry levels have slowed, the list has started to replenish, and rates have slipped. At the time of writing 30 x WS205 is on subs for Sines/Med and with little currently left to cover expect vanilla levels to follow suit when next tested. 

An active week in the Med MR market where rates have picked. 37 x WS170 was the call for Med/TA on Monday morning but with the list tight for non-Russian players and some good enquiry we have seen rates firm. 37 x WS180 is last done for Med/TA with WAF tracking at a 25-point premium but with the list still lacking vanilla units and TC2 also active, owners will remain bullish into the weekend.

Clean Tanker Spot Rates (WS)

Dirty Products

Handy

A quiet week overall on the surface for Handies in the north despite a handful of units being picked off under the radar. A surprising 30 x WS140 was seen for a voyage down to the Med but this was not to be repeated as 30 x WS165 took hold. Towards the week’s end activity began to tick upward as competing MRs went on subs mainly by way of part cargoes. But should these vessels fix, the list will tighten, and Handy owners will feel there is an opportunity to begin to build on last done levels, particularly with vessels expected to leave the region for now. However, firm enquiry will need to get off to a fast start here if these ideas are to be realised.

The Med has seen another busy week with enquiry continuing into a firm and tight market where well-approved and modern units were thin. The week started with 30 x WS195 on subs before quickly firming up to WS210 by mid-week where levels currently reside. We expect under-the-radar activity to rule the roost as we look to the start of IE week with a couple of cargoes reported to be uncovered off early March dates. We feel that levels look likely to rise further here.

MR

A slow start to the week for the MR owners in the North with enquiry coming in the form of part cargoes. Early in the week, it looked as though the North may be overrun by MRs, however, vessels of earlier dates were fixed away before this possible abundance of tonnage could materialise. The week ended in a relatively active fashion as reports of an MR tender gathered steam and saw vessels quietly put on subs for now. As we look to next week, we expect levels to hold around the 45 x WS110 mark for XUKC runs but with usual Med players opening in the North, we could see some sharper numbers on offer for cargoes down to the Med.

Not the week owners will have hoped for overall in the Med despite levels firming as the opportunity to kick levels on further at full stem failed to materialise. A part cargo early on basis 40kt drew attention, fetching the equivalent of 45 x WS137. The list is left with a lack of well-approved and modern units keeping owners’ ideas toward the region of 45 x WS140 but if these levels are to materialise enquiry will need to surface early into next week’s trading.

Panamax

Workable tonnage is scarce in the North leaving few options for charterers but to seek alternatively sized vessels should enquiry surface. Laden tonnage on its way to the continent is uncertain of final disports and instruction for now. Over in the USG/Caribs region, despite local Aframaxes heating up and Panamaxes being clipped away, sentiment and levels have struggled to move on from the flat feel and 50 x WS120 remains for now. All things being equal as we head into next week, we could see rates slowly begin to tick upwards.

Dirty Product Tanker Spot Rates (WS)

Rates & Bunkers

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

wk on wk changeFeb 20thFeb 13thLast Month*FFA Q4
TD3C VLCC AG-China WS665596061
TD3C VLCC AG-China TCE $/day7,75046,00038,25039,25036,750
TD20 Suezmax WAF-UKC WS392898186
TD20 Suezmax WAF-UKC TCE $/day2,50034,50032,00026,75028,250
TD25 Aframax USG-UKC WS18146129129137
TD25 Aframax USG-UKC TCE $/day7,25033,50026,25026,50025,250
TC1 LR2 AG-Japan WS-4122126126 
TC1 LR2 AG-Japan TCE $/day-75025,25026,00026,500
TC18 MR USG-Brazil WS14160146168175
TC18 MR USG-Brazil TCE $/day2,50017,00014,50018,25017,500
TC5 LR1 AG-Japan WS8137130124136
TC5 LR1 AG-Japan TCE $/day2,50019,75017,25015,50017,250
TC7 MR Singapore-EC Aus WS27202175168176
TC7 MR Singapore-EC Aus TCE $/day5,25022,25017,00015,75016,750

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

Bunker Prices ($/tonne)

wk on wk changeFeb 20thFeb 13thLast Month*
Rotterdam VLSFO  -7536543544
Fujairah VLSFO  +1561560569
Singapore VLSFO  +0568568586
Rotterdam LSMGO  +13672659660

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