Key takeaways from this report:
Dirty – East of Suez: Mainstream crude tanker demand moves in tandem with flows, supporting rates for VLCC/Suezmax in 2025
Clean – East of Suez: More newbuild VLCC and Suezmax entering clean trade, with the majority of non-newbuilds returning to dirty
Dirty – West of Suez: Lower trade demand in the Atlantic takes its toll on US Gulf Coast departures, hurting Aframax rates
Clean – West of Suez: Dangote refinery ramping up production, increasing MR utilisation out of WAf
Dirty – East of Suez: Mainstream crude tanker demand moves in tandem with flows, supporting rates for VLCC/Suezmax in 2025
Lower volumes of crude oil have been traded at sea over the past few years, especially when compared to the 2019 average (red line on chart)
➔ As a result, mainstream crude tanker tonne-mile demand (excl. Russia, Iran, Venezuela) has been significantly reduced when compared to this 2019 average (bars on chart)
However, so far in Q1 2025 we’ve seen a comeback in mainstream crude tanker demand, largely driven by fears in India and China about crude supply immediately after the OFAC sanctions on 10 Jan and questions around whether Russian exports could be maintained
➔ This stimulated replacement buying, sourced from both the MEG and Atlantic Basin, which lifted tonne-mile demand and rates for VLCCs and Suezmaxes in particular
We expect these replacement flows, to continue, but to a lesser extent, as crude demand in Asia is seasonally weaker over the summer months
➔ If US tariffs on Canada and Mexico materialise, this will also likely send crude from the Americas further afield and increasing tonne-mile demand
Clean – East of Suez: More newbuild VLCC and Suezmax entering clean trade, with the majority of non-newbuilds returning to dirty
VLCC and Suezmax saw a surge in dirty-to-clean switching last year， the trend has reversed over the past 6 months
➔ Narrowing clean-dirty spreads and supportive VLCC-Suezmax market since the start of the year 2025 are discouraging owners to involve in clean trades
➔ More vessels switching back to dirty and fewer staying in the clean trade
A number of newbuild Suezmax and VLCC are carrying clean products from East to West
➔ No tank cleaning costs for newbuild VLCCs, combined with a lower $/mt freight basis, make them an attractive option for both traders and owners to fix clean cargo
➔ Suezmax orderbook remains strong, adding further cleancapable capacity
➔ High likelihood newbuilds perform their maiden voyage in clean trade before transitioning to dirty, as clean voyages from East to West helps the owners to reposition vessels and minimizing ballast legs
Dirty – West of Suez: Lower trade demand in the Atlantic takes its toll on US Gulf Coast departures, hurting Aframax rates
US Gulf Coast crude/condensate voyages have declined for the second month in row, remaining under 160 voyages for March as well
This is well below last year’s levels and continues a trend of lower departures first observed in August of 2024
Softer demand from Europe driven by refinery maintenance season was a key factor behind this slowdown
➔ We observed increased loadings pointed towards Asian markets for the month of February and March, but the use of larger vessels instead of Aframaxes on these long-haul voyages kept departures from increasing
➔ European refiners struggling with weak margins took lower volumes of US crude, keeping Aframax rates under pressure
➔ Refinery closures in Europe, which started in 2024 with more to come in 2025 should keep these voyages under pressure
Going forward, uncertainty around tariffs and their implications for domestic refining markets, will impact whether USGC departures will further decrease if more crude is pulled away from export markets due to the need for domestic consumption
Clean – West of Suez: Dangote refinery ramping up production, increasing MR utilisation out of WAf
Dangote Refinery continues to increase domestic crude intake, resulting in higher refined product output
➔ Crude imports have increased 24% from Dec-23 to Jan-24 to 430 kbd, signifying the potential ramp-up in refinery runs
➔ Refined product exports like gasoline, diesel, jet are rising steadily, with further upside expected as production stabilises
➔ An increasing number of MR tankers are now engaged in short haul intra-West Africa (WAF) trade, which may not be enough to offset the tonne-mile losses from the NWE-Waf route
Moving forward, a planned maintenance for RFCC (gasoline making) unit of 204 kbd in June (IIR), will potentially tighten regional product supply
➔ WAf would likely import gasoline from NWE as a replacement
➔ This could provide a short-term support for longer-haul MR utilisation in the Atlantic Basin
Data Source: Vortexa