Global VLCC utilisation (excl. Iran & Venezuela) per voyage status
Crude exports out of the Middle East fell by almost 10% in August due to voluntary Saudi cuts. Breaking this down by vessel class, VLCCs have seen Middle Eastern crude flows decline by almost 10% while on other vessel classes, flows increased by over 10%.
With laden VLCC utilisation (excl. Iran & Venezuela trade) trending lower since May (an almost 3-year high), the latest decline in Saudi exports has pushed the VLCC laden-to-ballast ratio to a 1-year low. This has contributed to increased global VLCC tanker supply, putting negative pressure on VLCC freight rates across the board - most notably on the US Gulf-to-China (TD22) as well as the West Africa-to-China (TD15) freight rates.
Looking ahead, limited demand from China as well as persistent OPEC+ supply cuts point to a marginal seasonal recovery in crude demand in the latter half of 2023. This could see VLCC freight rates remain under supply side pressure for the remainder of the year.
ANALYSIS / WEST OF SUEZ / DIRTY
LatAm East Coast crude tanker utilisation falls due to lower Brazilian exports
LatAm East Coast crude tonne-miles (LHS) and utilisation (RHS)
Brazilian crude exports fell m-o-m in August as policy intended to price domestic products lower than imports led to increased refinery runs, and therefore less crude available to export (source: Argus).
As a result, utilisation from LatAm East Coast (Mexico + South America East Coast) for VLCCs, Suezmaxes and Aframaxes has been falling. Total tonne-miles for these tanker classes were about 15% lower in the first week of September compared to mid-August.
Recent improvement in the domestic situation in Brazil as well as increased crude exports from Mexico will likely bring a recovery in utilisation for September, especially for VLCCs in the region.
Data Source: Vortexa