Contents
Table of Contents
New Frontier
Much of the focus over the past few years has been on the impressive ramp up of oil production in Guyana where production is on track to rise to 800kbd next year from zero in 2019. Yet in the years ahead, new frontiers in the oil market could emerge and one such region with potential is Namibia.
The South West African country sits between oil rich Angola and oil poor South Africa, highlighting its hydrocarbon potential or lack of. The region was explored back in the 1970s and 1980s but declared unviable at the time. Although the Kudu gas field was discovered 50 years ago, it was never developed, but this could be about to change with production starting between 2026 and 2028, should FID be taken this year.
Up until 2022, most exploration activity resulted in dry wells; however, a breakthrough occurred in early 2022 with Shell and TotalEnergies finding oil in the Graff and Venus blocks. The latter could be the largest ever discovery in Sub-Saharan Africa and one of the top 10 finds this century. Exploration activity has continued since 2022; yet, Majors operating in the region have remained tight lipped on the outcome of their activities. Nonetheless, with TotalEnergies spending 50% of its exploration budget in the country last year and planning to spend 30% of its budget there this year, the region clearly has significant potential. In addition to TotalEnergies and Shell, Galp is drilling 2 exploration wells, whilst Chevron and Woodside have undertaken seismic surveys.
The development process is likely to be similar to Guyana, with FPSOs deployed to extract the oil and transfer it onto tankers for export. Consultancy WoodMackenzie estimates that production could exceed 500kbd within a decade and continue to grow thereafter with first production likely towards the end of this decade (2028 or 2029). The government is keen to see first oil as soon as feasibly possible and is said to have sought advice from Guyana on how to structure production sharing agreements. The region has also become increasingly attractive to major oil companies, who view the country as more politically and fiscally stable compared to its neighbours to the North.
For the tanker market, Namibia is unlikely to have an impact this decade. However, it provides a new frontier for the oil market which will require tankers to deliver oil to export markets. Whilst little is known about the specific properties of the grades, the demand for such crude is likely to be primarily in the East, with VLCCs and Suezmaxes the most likely beneficiaries.
Wells Drilled vs. Discovered Reserves
Crude Oil
Middle East
A mainly lacklustre week on VLCC’s saw most fixtures done off market but rates remained steady as owners showed resistance. However, there are signs of a softening sentiment as we enter the weekend with holidays in the Far East and upcoming Eid in the Middle East expected to have a negative impact. The position list remains balanced but a few days of inactivity could lead to a rate drop. Today we are calling 270,000mt AG/China at ws 65 and 280,000mt AG/USG is now at ws 41.
The list in the AG for Suezmaxes is moderately well stocked giving Charterers plenty of options. TD23 charterers will be looking to push to 140,000mt x ws 65 via the Cape. To head East the market is still soft and there is a chance some may push below ws 115.
The week has past by with very little noise echoing from the East. Under the radar activity has left fewer options available to Charterers in the AG but with that said, sentiment remains soft. TD8 continues its descent at 80,000mt x ws 178.64 however a fresh test is required. With Eid celebrations early next week, some Charterers reached further ahead and therefore will be little surprise if the East faces fresh challenges next week.
West Africa
It’s been another quiet week on VLCCs in WAF as Charterers continue mainly using own or COA tonnage which is having a detrimental effect on rates. We are now entering May stems and the market needs to a fresh test but Charterers feel under no pressure to move and in today’s market, we are expecting a WAF/China to fix at the ws 65 level.
Suezmax markets in West Africa are steady and with a busier market across the Atlantic, rates are likely to hold for now. As brokers, for TD20 we estimate this today at 130,000mt x ws 107.5
Mediterranean
TD6 has been very much below the radar this week and rates remain steady. We estimate CPC/Med today at 135,000mt x ws 115. Rates to head East have stayed somewhat constant at around $5.0M for Libya/Ningbo via C/C.
The Med kicked off this short week with several Charterers reaching beyond the natural window adding fuel to the fire in terms of activity. As a result, rates have risen throughout the week, and as we approach the end of the week, XMed stands at ws 170. Looking ahead to next week, the list is tightening for charterers seeking to cover their 3rd-decade cargoes, which could cause rates to rise as prompt tonnage becomes thin on the ground.
US Gulf/Latin America
VLCC rates have been under pressure all week in USG as the lack of fresh activity combined with rising availability is continuing to push rates downward as we see first half May stems enter the fray. Brazil exports , on the other hand has seen a steady flow of cargo and rates have not moved all week so owners will be hoping to see an upturn soon if the pace in others parts of the Atlantic picks up. Today we expect a USG / China run will fix in the region of $8.5m while we estimate Brazil/China is paying around ws 63.5.
North Sea
Despite the start of the week being disrupted by weather in the Atlantic, fixing within the North market this week has remained relatively constant. We close the week with a XNsea voyage at ws 132.5 with sentiment in the region starting to warm off the back of a USG market starting to jump. As we look ahead to next week and the USG continuing to warm we expect vessels to be drawn away from the region allowing rates to climb in the North market.
Crude Tanker Spot Rates (WS)
Clean Products
East
A quiet week after the Easter break has damaged freight considerably. The rot had started prior to the weekend but with limited cargoes since then, the LR2s in particular have seen disappointing results. 75,000mt Naphtha AG/Japan dropped from ws250 last done to ws215 and then down to ws190, with the potential for more pain to come. 90,000mt USLD/Jet AG/UKC is untested as of writing but sure to be no higher than $5.5 million – some $1.0 million below where we ended the week before.
LR1s have faired slightly better with short hauls continuing to fix – but longer hauls have been largely untested while the bigger units were taken advantage of. Having said that, $4.7 million is now seen for AG/UKC and 55,000mt AG/Japan is no higher than ws230 in all probability. Until we see more of the volume coming back into the market, these rates will continue to fall away – and with the Eid holiday in only a few days, this may not be for a couple of weeks.
Mediterranean
All in all it’s been a lacklustre week for the Handies here in the Mediterranean with rates coming under pressure from the off. The long Easter weekend brought with it a replenished list come Tuesday morning and as a result rates soon slipped 20 points to 30,000mt x ws 275 Xmed. Fast-forward to Friday and XMed rates are now at the 30,000mt x ws 255 mark with BSea/Med tracking at a reduced premium of +30 points. Heading into the weekend, little remains left to cover so expect much of the same come Monday with another replenished list.
Finally to the Med MR’s, where rates have remained steady for the best part of the week. Despite average enquiry levels rates have continued to trade around the 37,000mt x ws 235-240 levels for Med/TA which has been due to the list still lacking non-Russian players on the front-end. WAF is in need of a fresh test with the premium expected to increase off the back of improvement seen ex UKC. At the time of writing no cargoes remain and the feel is that this will need to change next week if Owners are going to be able to keep levels holding.
UK Continent
After this fairly disrupted week comes to a close, we basically end where we started in this UKC MR market with 37,000mt x ws 200 being repeated a number of times for TC2 throughout. That said, the tonnage list today certainly looks a lot more hopeful for the Owning fraternity and with a good start to next week on the enquiry front, we can expect some more bullish ideas to be floating around this market. WAF has remained an undesirable run for many and with that we see the premium push up to 30 points, and even more for a tricky jet requirement. Owners will be quietly optimistic heading into next week as we keep a close eye as to where the restocking of the list will come from.
It was a similar story for the Handies also as we see 30,000mt x ws 217.5 being repeated a number of times for X-UKC throughout this week, but with some reasonable levels of enquiry the tonnage list is looking rather thin. Laycans for next cargoes will be key as Charterers could find themselves with slim pickings as Owners look to push up ideas once again.
Clean Tanker Spot Rates (WS)
Dirty Products
Handy
The past week, shortened by the Easter holidays, has been a quieter week in terms of activity and any deals done have been largely kept under the radar. The sluggish feel right now in the North can be predominantly attributed to a combination of refinery maintenance and a build-up of tonnage after a long weekend in Europe. While supply in the North continues to build, owners face a challenge in maintaining last-done levels with negative pressure building.
In Med, we started the week with numerous prompt units across the region leaving Owners with no choice but to reassess their ideas on the next cargo they find. Fast-forward to Friday, with rumours of ws180 on subs and prompt ships still awaiting employment, there remains support in the idea that levels will continue to come under pressure early next week.
MR
Mirroring sentiment of the surrounding Handies, this sector also provides little opportunity for Owners in the North. This said, limited part cargo relief was at least afforded to a lucky few, however the picture is showing what we are likely see on next done, with Charterers sensing an opportunity to sharpen levels.
MRs in the Med however have at least had a more reliable cargo base, however the overhang of availability has proved too great a negative driver. Test throughout the week have seen rates fall to ws175 at time of writing where looking ahead, more value could well be lost before any recovery is seen.
Panamax
Naturally positioned tonnage in Europe remains scarce this week which is perhaps just as well as enquiry has been elusive leaving the market requiring a fresh test in order to revalidate benchmarks. Additionally, the softer sentiment in Carib/USG has persisted with rates flowing finding a floor losing some ws40 points week on week. This in mind, European tonnage may be less inclined to speculatively ballast back to the US.
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 4th | Mar 21st | Last Month* | FFA Q2 | |
| TD3C VLCC AG-China WS | -6 | 65 | 72 | 72 | 65 |
| TD3C VLCC AG-China TCE $/day | -8,000 | 37,000 | 45,000 | 45,250 | 37,250 |
| TD20 Suezmax WAF-UKC WS | +1 | 106 | 105 | 103 | 106 |
| TD20 Suezmax WAF-UKC TCE $/day | +0 | 35,000 | 35,000 | 34,250 | 35,500 |
| TD25 Aframax USG-UKC WS | +27 | 176 | 149 | 201 | 187 |
| TD25 Aframax USG-UKC TCE $/day | +9,500 | 37,250 | 27,750 | 47,750 | 41,750 |
| TC1 LR2 AG-Japan WS | -120 | 194 | 314 | 152 | |
| TC1 LR2 AG-Japan TCE $/day | -43,250 | 43,500 | 86,750 | 29,000 | |
| TC18 MR USG-Brazil WS | +18 | 295 | 277 | 307 | 237 |
| TC18 MR USG-Brazil TCE $/day | +3,250 | 37,500 | 34,250 | 40,500 | 26,250 |
| TC5 LR1 AG-Japan WS | -79 | 233 | 312 | 173 | 221 |
| TC5 LR1 AG-Japan TCE $/day | -21,000 | 39,750 | 60,750 | 24,500 | 36,750 |
| TC7 MR Singapore-EC Aus WS | -22 | 293 | 315 | 325 | 269 |
| TC7 MR Singapore-EC Aus TCE $/day | -4,000 | 33,500 | 37,500 | 39,500 | 29,250 |
(a) based on round voyage economics at ‘market’ speed, non eco, non scrubber basis
Bunker Prices ($/tonne)
| wk on wk change | Apr 4th | Mar 21st | Last Month* | |
| Rotterdam VLSFO | +13 | 608 | 595 | 581 |
| Fujairah VLSFO | +9 | 644 | 635 | 646 |
| Singapore VLSFO | +6 | 644 | 638 | 634 |
| Rotterdam LSMGO | +17 | 801 | 784 | 753 |
