VLCC tanker rate index (LHS) vs. VLCC utilisation ex-West Africa and US Gulf (RHS)
Global VLCC utilisation has picked up by over 5% in June. This is mostly driven by tanker demand out of the Atlantic basin (US Gulf and West Africa) which has risen almost 20% in the same period. Most of these flows are headed to China and South Korea, which is in line with a similar pick up in VLCC freight rates towards East Asia.
On the tanker supply side, VLCC laden numbers are once again higher than ballast numbers in the tier 1 market. Additionally, availability of VLCCs in West Africa remains low, painting a tight tanker supply picture and adding further support for freight rates.
With global seaborne oil trade having reached a seasonal peak, as well as building crude inventories in China, loadings in the summer months could drop off. This could limit the upside for VLCC rates in the summer.
ANALYSIS / WEST OF SUEZ / DIRTY
Aframaxes and Suezmaxes heading towards the Mediterranean, but excess tonnage curbs freight rate elevation
No. of Aframax & Suezmax ballasting to Europe (excl. Russian vessels) vs. TD19 Cross-Mediterranean rates ($/t)
·Aframax and Suezmax tanker owners are opting to head towards Europe after discharging their cargo. This is in line with the elevated Libyan m-o-m exports, according to preliminary June figures.
·Exports might remain at these levels or grow higher as the BTC pipeline has not come online at full operational levels. The accumulation of tonnage in the region has left Cross-Mediterranean Aframax freight rates suppressed, hovering around 1-year lows.
The prospective discharge of the VLCCs in Ain Shukhna and the transportation via the SUMED pipeline could create further enquiries for Aframax and Suezmax tankers in Sidi Kerir, thus further supporting demand in the Mediterranean.
Data Source: Vortexa