Contents
Table of Contents
Looking into 2025
Earlier this month the IEA released its monthly oil report, offering for the first time their analysis of how oil markets could shape up in 2025. The agency expects global oil demand to grow by 1.1 mbd next year, just marginally below 1.2 mbd expected in 2024. Despite the accelerating uptake of clean energy technologies, projected growth in demand in 2025 is reasonably robust, in line with average growth rates seen since 2011. Demand growth will continue to be led by non-OECD countries; however, China’s share of total increase will decline significantly due to a rapid domestic uptake of electric vehicles and high-speed rail as the country’s post-lockdown rebound dwindles. China’s demand is projected to account for just 27% of non-OECD demand growth next year, compared to 43% in 2024 and 80% last year. Strong demand growth next year is also seen in India, other developing Asian economies and the Middle East. Total OECD demand will see just a marginal drop, with the decline in European consumption decelerating notably as economic conditions improve.
On the supply side, the IEA expects continued robust gain in non-OPEC production, led by the US, Brazil, Guyana and Canada. The US will once again be the largest contributor, although growth rates will continue to slow. Total non-OPEC supply is forecast to rise by 1.4 mbd in 2025, outstripping the increase in oil demand, which indicates an even smaller call on OPEC+ supply and highlights the risk of extended OPEC+ production constrain.
The refining landscape is set for further changes next year, with higher-cost operators feeling the pressure. European crude refining runs are projected to decline by 300 kbd due to announced capacity closures at the Grangemouth and Wesseling plants, whilst LyondellBasell also plans to close its 260 kbd Houston refinery by spring 2025. Mexico’s 340 kbd Olmeca refinery, intended to meet domestic demand, is anticipated to start operating in 2025, whilst the IEA is also pencilling in a 300 kbd gain in Africa’s throughput in 2024 and another 300 kbd in 2025 as the 650kbd Dangote plant ramps up operations.
East of Suez, China’s refining runs are projected to rise by 200 kbd next year and India’s throughput is projected to grow by 190 kbd. In the Middle East, refining runs are likely to grow by just 100 kbd next year, although throughput could increase by 0.7 mbd this year as newly commissioned plants ramp up operations.
Overall, the IEA’s 2025 projections are a mixed bag of news for the tanker market. It is largely positive for the crude segment, particularly considering increases in oil supply in the Americas and rising demand in the East. For the product tanker market, it is not such a clear cut. The anticipated decline in European crude throughput will support incremental import demand but will be more than offset by declining imports into West Africa and Mexico.
Global Oil Demand by Quarter (kbd)
Crude Oil
Middle East
VLCC rates in AG slipped downwards this week after a lacklustre start to the first decade of May . Enquiry was sporadic which increased the pressure on owners but on the flip side there has been lot of tonnage quietly fixed away in private deals so the list was looking more balanced by the end of the week and we could be close to the bottom of this recent downturn. Today we are calling 270 Ag/China ws 59 and 280 Ag/USG is now at ws 39 level.
Raised tensions in the AG seem to have had little impact on rates in the AG for Suezmaxes. TD23 remains steady at around 140,000mt x ws 65 via C/C. To head East the market is around ws 115 depending on what ilk of ship you require, less could be tested on compromised units.
It has been a waiting game in the AG this week with all parties patiently awaiting how the building tensions would unfold. Owners are yet to be deterred and a little bit more activity took place with AG/East freshly tested at 80,000mt x ws 172.5. In the Indo region, despite sentiment remaining steady, the list remains light and as a result, Owners continue to look for opportunities where rates can be tested upwards.
West Africa
There was some movement this week on mid decade barrels but owners did put up some resistance to Charterers efforts to fix at below last done. A noticeable pick up in USG activity meant that the rate drop off did not follow the pattern in the AG and there is now a steady feel here as we enter the weekend. We feel that in today’s market a WAF/China run should fix at ws 65 .
Suezmax markets in West Africa have dropped like a stone for the end of this week due to Charterers holding back, not all are convinced just yet and TD20 seems to have stabilized close to 130,000mt x ws 107.5.
Mediterranean
TD6 remains steady, but is in need of a fresh test. There are a few private deals that slipped under the radar but the details have not surfaced yet. There’s a few keen ships around and fixing shouldn’t be too difficult, we estimate CPC/Med today at 135,000mt x ws 115. Rates to head East are steady at around $5.2M for Libya/Ningbo via the Cape.
As the week began, owners were keenly aware that Ceyhan’s allocation for fixing was already done, having been well covered ahead of time, particularly with April’s schedule nearly finalized. However, it quickly dawned on them that the North Africa loading zone presented a better chance of securing employment off-schedule, though the competition for these opportunities favored charterers. Consequently, a negative impact on trading, resulted in a decrease in rates dropping to ws 185 for an XMed voyage. Looking ahead, owners find some cause for optimism with CPC dates extending into May. Yet, an excess of available vessels persists that must be addressed before any meaningful reversal in trends can be anticipated.
US Gulf/Latin America
It’s been a busy week in the USG, but Charterers have had to dig deep as tonnage availability more than covered demand and rates actually softened during the mid part of the week. There are now signs that this is starting to turn around with a plethora of last decade cargoes released into the market Owners sentiment is starting to firm. Brazilian export had a steady week and is currently seeing stability in freight levels. Today we expect a USG/China run will fix in the region of $8.65M while we estimate a Brazil/China run is paying around ws 63.5 level.
North Sea
Owners in position in the Northern Aframax market started the week well and as local units were trimmed from the list, rates in the region climbed significantly. This was short-lived as relets began once more to drop the market looking for short-term employment from their own program and as a result, the North market closed at ws 142.5 for an XNSea voyage. Looking ahead to next week, we expect rates to be tested further as with the USG market still coming off, many owners might decide to stay in the region lengthening the list.
Crude Tanker Spot Rates (WS)
Clean Products
East
The LRs this week have seen a big jump as the number of cargoes entering the market continued to build. LR2 Owners are really pushing hard to inflate rates, but they need to realistically push to levels where for Charterers it makes sense to go on subs and get fixed. With Mid to high $7.0M being offered for Jet going West, this is maybe a touch too much for a Friday and as the standoff continues our assessment is $6.75M for AG/West Jet and 75,000mt x ws 275 for TC1.
The LR1s have very much enjoyed following the drive of the larger sizes but Owners have taken slightly less aggressive steps on last done rates and as such there has been more activity seen on this segment. TC5 is at the 55,000mt x ws 280 level (and needs another test) while AG/West Jet is at $5.3M levels. Charterers will be looking forward to some respite that the weekend brings, but suspect Owners will be looking forward to Monday.
The MRs East of Suez have firmed this week, where both on and off market questions have seen the list tighten up to the of the end month as East and Westbound runs picked up pace. Rates hovered at last done and Westbound took a slight dip early on but we close the week with $3.3M on subs for UKC, ws 310 for TC17 and ws 220 for TC12 and the majority of ballasters holding off until next week to offer. With uncertainty in the region and a firming LR market expect to see the climb continue next week.
In the Far East, MR activity increased but still stayed at a low level. A Charterer managed to push the regional run rate down as a result. A Korea/Spore run went down to the $825-$850k level, while long hauls seemed to be bottoming out. TC7 was repeated at ws 280 while Korea/OZ was untested. Fixing in May has not officially started yet and Owners should be in a better position on Monday
Mediterranean
It was another rollercoaster of a week for the Handies in the Mediterranean, as we started this week at a bottomed 30,000mt x ws 200 level on Monday only to see by Tuesday pushing the ws 300 barrier and beyond. The real catalyst was a handful of stems all off similar windows in the East Med region, and as Charterers squabbled over the few ships available, Owners took the bull by the horns and enjoyed some positivity. Rates did reach around the 30,000mt x ws 330 region, but in reality we feel we’ve probably capped out at the ws 300 mark and await to see if Owners can keep this momentum into next week and dig in.
Meanwhile, on the MRs we saw a light dusting of enquiry throughout the week, but in reality the main employment opportunities was the X-Med handy stems which rapidly became financially tempting as the week progressed. This leaves us with a pretty tight tonnage list, and for cargoes needing certain requirements, such as Naphtha/Jet suitability, the few Owners around will be in the driving seat.
UK Continent
The stronger of the sectors, the Handies here have enjoyed some good levels of enquiry and with the Mediterranean market rocketing in the first half of the week, the UKC Owners have been able to pick up a few points here and there. The major cap though as mentioned above has been the excess MRs willing to keep cargoes from building as we see rates edge up to the 30,000mt x ws 245-250 region and hold there.
Not the most enthralling week for the MRs plying their trade in the UKC as rates for the majority sat flat at the 37,000mt x ws 180 mark for TC2. 5 points differences for certain distressed ships was seen but in reality if we hadn’t had the stronger Handy market we could well of seen a few more points lost throughout the week. WAF has also been on the low side but we do see the premium creep back up and 37,000mt x ws 210 is the call. Owners have done well to keep tonnage moving and limiting options for Charterers but with a few X-UKC runs picked off, tonnage turnover will be quicker and with a weaker States market, Owners must tread carefully to not over stock our lists.
Clean Tanker Spot Rates (WS)
Dirty Products
Handy
Activity got off to a fast start in the North, with plenty of fixtures to be reported. Enquiry clipped away at the front end of the list, leaving the region feeling tighter for the week’s balance. However, the pace of activity soon slowed down and with the repetition of ws 235, sentiment has remained steady in the region. Owners will be hoping for a strong start to enquiry next week if hopes of firming are to be realized.
It was a similar story in the Med with regard to activity. The week started off with an injection of cargoes and maintained its volume for the majority of the week. Towards the latter half of the week, there was a sluggish feel to the sector as enquiry took a breather, ending the momentum that was starting to build. Numerous repetitions of ws 170 have left sentiment steady. Enquiry will need to get off to a quick start to keep ample tonnage at bay.
MR
We started the week with a fresh test, resulting in 45,000mt x ws 175 being set, with subsequent benchmarking exercises showing levels are holding for now. That said, upcoming tonnage towards the end of the month has left owners hopeful for a quick start heading into next week to prevent sentiment from sliding into Charterers’ favor.
MRs in the Med have ticked over this week, a recent test determined levels at ws 155 for an XMed voyage, and although only activity was sporadic, recent opportunity basis 30kt has helped Owners keep the lists from stagnating.
Panamax
This week has seen TA enquiry pick up a tad, however these deals did eventually fail. Panamax owners will feel optimistic that enquiry will return to the region soon however where traders are at least trying to make some TA runs stick. Naturally positioned units are still thin however, with most owners having chosen to ballast to the US some weeks ago to find more consistent employment. Despite failing, expect levels for TA to hold at around the 55,000mt x ws135 lvl should we see firm enquiry surface.
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 | Apr 18th | Apr 11th | Last Month* | FFA Q2 | |
| TD3C VLCC AG-China WS | -2 | 60 | 62 | 72 | 62 |
| TD3C VLCC AG-China TCE $/day | -1,750 | 30,750 | 32,500 | 45,000 | 33,250 |
| TD20 Suezmax WAF-UKC WS | -20 | 109 | 129 | 105 | 105 |
| TD20 Suezmax WAF-UKC TCE $/day | -12,000 | 37,000 | 49,000 | 35,000 | 35,250 |
| TD25 Aframax USG-UKC WS | -35 | 189 | 224 | 149 | 184 |
| TD25 Aframax USG-UKC TCE $/day | -12,500 | 42,750 | 55,250 | 27,750 | 41,000 |
| TC1 LR2 AG-Japan WS | +45 | 207 | 162 | 314 | |
| TC1 LR2 AG-Japan TCE $/day | +16,500 | 48,500 | 32,000 | 86,750 | |
| TC18 MR USG-Brazil WS | -41 | 239 | 279 | 277 | 238 |
| TC18 MR USG-Brazil TCE $/day | -8,000 | 27,250 | 35,250 | 34,250 | 27,250 |
| TC5 LR1 AG-Japan WS | +42 | 231 | 189 | 312 | 226 |
| TC5 LR1 AG-Japan TCE $/day | +11,250 | 39,500 | 28,250 | 60,750 | 38,500 |
| TC7 MR Singapore-EC Aus WS | -4 | 281 | 285 | 315 | 272 |
| TC7 MR Singapore-EC Aus TCE $/day | -500 | 31,500 | 32,000 | 37,500 | 30,000 |
(a) based on round voyage economics at ‘market’ speed, non eco, non scrubber basis
Bunker Prices ($/tonne)
| wk on wk change | Apr 18th | Apr 11th | Last Month* | |
| Rotterdam VLSFO | -5 | 606 | 611 | 596 |
| Fujairah VLSFO | -6 | 639 | 645 | 629 |
| Singapore VLSFO | -9 | 637 | 646 | 637 |
| Rotterdam LSMGO | -52 | 739 | 791 | 770 |
