Sanctions Sting?

Earlier this week, news emerged that one of the major port operators in China’s Shandong Province, Shandong Port Group (SPG), would ban the entry of vessels which appear on the United States OFAC sanctions list. Given the fact that independent refiners in the province are the largest receivers of Iranian, Venezuelan and Russian crude, the impact could be significant. Looking at 2024 trade to the ports within SPG’s remit, it becomes possible to get a sense of what sectors might see the greatest impact.

Firstly, it is important to note that SPG does not control all ports in Shandong Province, however, according to their website, they control major ports including Qingdao, Rizhao, Yantai, Dongying, Binzhou and Weifang, which together accounted for 2.4mbd out of the 3.3mbd of crude imported into the province in 2024. Secondly, it is somewhat unclear if all terminals within these ports fall under SPG’s remit, and thus are now unable to receive OFAC sanctioned ships. Nevertheless, given the scale of imports into SPG ports, the potential impact is sizeable.

Looking at trade data, of the 2.4mbd of crude heading to these ports last year, approximately 1.1mbd of crude originated from Iran, Venezuela or Russia. However, given attempts by Iran and Venezuela to disguise the origin of their crude, the actual figures could be higher.

Iranian crude flows into China are likely to be most impacted, with 67% of the vessels tracked shipping Iranian crude to SPG ports last year featuring on the OFAC list, including 42 VLCCs, 8 Suezmaxes and 1 Aframax, which had been trading to SPG ports, but will now be unable to do so. The impact on Venezuelan flows for now looks much more limited. Just one OFAC sanctioned Aframax was tracked shipping Venezuelan crude to China in 2024. Whilst this looks suspiciously low, perhaps it suggests more sophisticated evasion tactics. The impact on Russian flows is more sizeable, as 43 OFAC listed Aframaxes and Suezmaxes with Russian crude onboard visited SPG ports last year, with the majority of Russia to China trade heading to non SPG ports. The Biden administration issued further sanctions against Russia today, and the incoming Trump Administration is also expected to step up sanctions against its adversaries.

So how impactful will the ban be? Based on the current sanctions list, VLCCs on the Iran to China trade are likely to be the most impacted sector, with 42 VLCCs which had been trading to SPG ports now unable to do so. Aframaxes and Suezmaxes impacted on the Russia to China trade number stands at 43, however, this is a smaller share of the overall (dark) fleet for these sizes. It is unclear to what extent these vessels could be diverted to different terminals. We could also see these vessels “swapped” with those which are yet to be sanctioned by OFAC, with the sanctioned ships moving into other parts of the Russian and Iranian oil supply chain. STS activity could also be used to ensure the final delivery leg is conducted on non-sanctioned ships. Overall, we count 344 LR2/Aframaxes, 149 Suezmaxes, and 194 VLCCs undertaking illicit activity, suggesting at least to some extent that these vessels can be swapped, provided they are not on the OFAC list (a total of 89 VLCCs are currently OFAC sanctioned).

For the mainstream oil and tanker market, the hope is that the new port ban provides another barrier to trading sanctioned crude and ships, shifting demand from “dark” to “light”. It also reinforces an emerging (and still to be confirmed) trend of buyers shying away from sanctioned crudes due to fear of tougher sanctions from the incoming US Administration. Whilst it may be difficult to gauge the magnitude of the development, it is hard to see anything but upside for the mainstream tanker market.

Crude Oil

East

The first full week of 2025 started with a mixed bag of emotions for VLCCs in the East. The AG region was slow to get off the mark, however, as we progressed through the week, we started to see a decent pace of enquiry with charterers stepping out to cover end decade cargoes. The tonnage list has been chipped away at and now does not make for easy reading. All eyes on Monday now with the final remaining decade stems prior to February dates confirmation. Owners will finish the week with a positive mindset and hope more can be achieved going forwards. Today we are calling AG/China WS47 & AG/USG WS30 basis 2025 flats.

The AG Suezmax market has started to turn, with rates looking more positive. A firmer VLCC market will prevent opportunities for part-cargoes and help to trim the list. For AG/West today owners will be looking to push to 140 x WS50 via C/C. For a cargo heading East there is more resistance and charterers could face difficulty achieving 130x WS85 for a well approved unit.

Aframaxes in the AG region saw an uptick in activity this week with the front end of the list swallowed up by the usual suspects. Despite a busy feel to the market, surrounding soft sentiment has kept rates low as we now assess AG/East at 80 x WS125. Indo activity picked up towards the tail end of the week, with a handful of ships removed from the list but sentiment remained soft. New enquiries that emerged for third decade were swiftly covered, as a TD14 run found a new floor at 80 x WS107.5. Charterers remain firmly in the driving seat moving into next week.

West Africa

A positive week overall for VLCCs in WAF, as enquiry from West Africa off the end of Jan early February position improved along with rates and this was also supported by fixing in the surrounding regions. As the week progressed this region provided some more interest as we see charterers struggling to secure tonnage at last done levels, with some charterers withdrawing or rolling proving owner’s resistance is paying off. Looking ahead to next week there are a few outstanding cargoes in the region so we could see a further uptick. Today we are calling WAF/East WS50.

Suezmax markets in West Africa have also started to pick up, and the recent slump in rates has made wait time less expensive as owners are sticking to their guns pushing up rates. For a TD20 run today owners will look to improve on the last done WS70. A firming USG Aframax market will help their case, and we expect to see more improvement next week.

Mediterranean

There are still ships around looking to be competitive for CPC but with improvements in West Africa, and the Afra market looking as though it has bottomed, there is some upside here. TD6 today owners will be looking to push over WS77.5. The usual players for East runs have ships in play but with improvements elsewhere owners will be looking to push above the $4M level.

This week was a chance for Mediterranean Aframax charterers to establish the market floor, given the huge volume of ships which had accrued on the front end of the list. Rates for vanilla XMeds started the week at WS127.5 which was already a serious correction but by the close North African cargos were just about holding onto triple digit values with Ceyhan loaders dipping to WS97.5. The Aframax market was plagued not only by excess capacity of its own, but also by an abundance of Suezmaxes. CPC cargoes were taken by this size at an equivalent of WS135 for most of the week but they also considered XMed cargoes. In addition, even VLCCs were seen to be absorbing double-Aframax stems, adding salt to the wounds. There is now optimism however, with the states market rebounding and with the exodus of ships from the Med and UKC areas. Resistance is building, signalling perhaps further negativity has been thwarted and there might be space for growth next week.

US Gulf/Latin America

For VLCCs in the USG the week began with TD22 downward trend continuing after a deal done at $5.85m and the Suezmaxes took a bruising as the Christmas hangover gave that market a strong downward correction.  This all changed after a few charterers stepped out on top of each other. Rates slowly began to improve, and it seems the ball was shifting back into the owner’s court. The backdrop on an inbound Trump, some bad weather and a firming Suezmax market also added a bit more flavour. The outstanding cargoes ex USG are moving slowly, and owners could look to capitalise and push rates up further. Overall, owners will be pleased with this week’s efforts and can look forward to next week with a positive head. A TD22 run should be fetching $6.3m whilst Brazil/China run WS49.

First full week after the new year goes off with a bang for Aframaxes in the USG. The week started with TA rates around WS125 and ends with a prompt replacement job on subs at WS185. That said, the market is realistically closer to WS165 levels with a slew of ships that have commenced ballasting to the region from NSea/Med which should minimize any more upticks on normal fixing windows.

North Sea

As had been the case in the Med, XUKC levels were gradually tested down as the week progressed. Due to excess availability and a slow cargo base it took until the mid-week point for charterers to really start working upcoming stems. By this point some owners had seen the writing on the wall and ballasted to the US. Those who did opt to stay had to face the music and come the end of the week values have plummeted, settling barely above WS105. With the exodus of ballasters though, owners will hope there is potential for a quick rebound next week.

Crude Tanker Spot Rates (WS)

Clean Products

East

A busier week after the new year break with both LR1s and LR2s moving swiftly off the bottom. TC1 was quick to get going with 75kt Nap AG/Japan pushing to WS120 then WS130 with another 10 points seemingly there soon. 90kt Jet AG/UKC was slow to react with only a small increase initially but with sustained eastbound pressure the next done to UKC must approach $4.0 million, up from $3.5 million at the start of the week.

LR1s have seen a quicker move with TC5 up some 30 points this week alone. We were close to parity on LR2s, but this was always going to change and as increased enquiries were seen rates firmed with 55 Naphtha AG/Japan now at WS157.5 and likely to breach WS160 next done. 60kt Jet AG/West will no doubt react and should now see $2.8-2.9m be asked. Short hauls haven’t seen the same speed of rises but still XAG is up some $100k for the week. 

A long-awaited injection of pace has been seen on the MRs east of Suez this week where we close the week with some 15 points being added to TC17. Sustained inquiry early in the week saw WS195 repeated and the early part of the window clearing down to a point where covering mid-month owners were shown an opportunity to push. TC12 is freighted at WS140 and westbound next done will hold in the low $2m. Going into next week expect to see a standoff between owners and those looking for last done as Singapore ballasters and those that have recently fixed short XAG cargoes appear in the next window.

Mediterranean

It’s been a week of two halves in this Med Handy market with rates yo-yoing throughout. We began the week with XMed trading at the 30 x WS160 mark but enquiry sluggish at the start of the week rates soon took a tumble. This combined with a well-supplied list left XMed at 30 x WS120 at midweek with BSea tracking at a 30-point premium. Fast-forward to Thursday where the taps seemed to be turned on across the Med with a handful of fresh cargoes coming into play and as a result rates have managed to bounce back. At the time of writing XMed sits at 30 x WS140 with BSea/Med to land at 30 x WS170 when next tested. Heading into next week the list is tight on the front-end but in the 6–10-day window tonnage looks to increase again so expect charterers to hold off till next week if possible.

Finally, to the Med MR market where it’s been a week of consistent enquiry and as a result rates have remained steady for the most part. 37 x WS115 has been the call for Med/TA this week with WAF being repeated at the 37 x WS145 mark. This level of enquiry has kept the list tight and with the UKC sector now starting to pick up expect the Med to jump onto its coattails come next week. Potential as we approach the weekend with 37 x WS125 seen for TC2.

UK Continent 

When the MR UKC list was pulled on Monday morning, we found ourselves with a glut of tonnage and it seemed rather hard to think this market would be in the position it is currently. But we saw cargoes continue to flow, as well as a good amount of tonnage clipped away privately, and once we got past the midway point some potential to improve from the 37 x WS105 was certainly beginning to be discussed. Come Friday morning with 10+ cargoes outstanding we see the few stems jumped on so far pushing TC2 to 37 x WS125 now and expecting some further hostilities ahead from owners especially with some rather prompt stems looking for coverage. 

The week kicked off in rather lacklustre fashion for Handies in the North with supply outweighing demand and rates trading around the 30 x WS132.5 mark for TC23. A few MRs also jumped on a couple of Handies stems in order to keep their vessel short in the belief the MR market would improve as the week rolled on. A UKC/MED cargo proved to be the catalyst for a rate jump as 30 x WS142.5 was paid resulting in next done levels for XUKC at the 30 x WS150 mark. At the time of writing, it has been a busy Friday on the MR front with a good number of stems outstanding and Handy owners are hopeful this positivity will have a domino effect down to the 30kt sector. Potential heading into next week here.

Clean Tanker Spot Rates (WS)

Dirty Products

Handy

It was not the week that Handy owners in the north would have hoped for to kick off the first full week of 2025 as enquiry remained underground for the most part. That said the list is still relatively tight, but the lack of enquiry is the main driver for soft sentiment with ideas of levels currently at 30xWS185-187.5 (ws 2024). The med has also seen a pretty lacklustre week and with what little enquiry there has been, charterers have tested the market down with 30xWS 155 (ws 2024) on subs by the end of the week. Prompt vessels still remain on the list, and we believe levels are still yet to find a floor as we head into the new week.

MR

In the North the week started with an unusual number of MRs naturally positioned which was a cause for concern for owners before a flurry of activity clipped the majority of units from the list leaving but a few options naturally positioned for charterers to choose from, but there is some support from WMed units who would look North to head for greener pastures. Levels softened to 45xWS130 (ws2024) but this does feel like the bottom for rates here at the moment. The Med saw little enquiry at full-stem leaving owners to offer for the usual handy cargoes. Some owners have made the choice to clean up a couple of their units, signalling owner’s pessimistic outlook for this sector. Sentiment here is soft and levels need a test, but we believe ideas sit between 45xWS110-115 (ws2024) at the end of the week.

Panamax

Panamaxes have seen a relatively mixed week with enquiry and vessels on subs only to fail both times. Levels are holding at 55xWS115 (ws2025) for now although units are set to open mid-next week which could apply some pressure. Over in the USG and Caribs surrounding Aframax markets are firmer off the back of an active start to the year but unfortunately for Panamax owners, that activity is yet to be seen here keeping levels and sentiment steady.

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 9thDec 26thLast Month*
TD3C VLCC AG-China WS6474140
TD3C VLCC AG-China TCE $/day5,75024,25018,50017,000
TD20 Suezmax WAF-UKC WS-19638285
TD20 Suezmax WAF-UKC TCE $/day-13,50015,75029,25031,250
TD25 Aframax USG-UKC WS-29130159183
TD25 Aframax USG-UKC TCE $/day-12,50026,25038,75047,500
TC1 LR2 AG-Japan WS29132103108
TC1 LR2 AG-Japan TCE $/day9,50028,25018,75020,250
TC18 MR USG-Brazil WS-89161250279
TC18 MR USG-Brazil TCE $/day-18,50016,50035,00040,250
TC5 LR1 AG-Japan WS45156111110
TC5 LR1 AG-Japan TCE $/day10,75024,00013,25012,750
TC7 MR Singapore-EC Aus WS2161159160
TC7 MR Singapore-EC Aus TCE $/day-25014,50014,75014,750

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

Bunker Prices ($/tonne)

wk on wk changeJan 9thDec 26thLast Month*
Rotterdam VLSFO  +16532516516
Fujairah VLSFO  +15561546542
Singapore VLSFO  +13570557549
Rotterdam LSMGO  +9659650655

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