Key takeaways from this report:
Dirty – East of Suez: Shift from long-haul to regional flows supports Suezmax utilisation and rate rebound
Clean – East of Suez: Soft demand weighs on clean tankers in recent quarters, but rates trajectory seems to bottom out
Dirty – West of Suez: Tightening tonnage in Gulf of Mexico and higher employment in Canada EC boost Aframax rates, for now
Clean – West of Suez: Rising NW Europe CPP loadings push TC2 rates up to six-month highs
Dirty – East of Suez: Shift from long-haul to regional flows supports Suezmax utilisation and rate rebound
Before the invasion, Pacific Basin demand was partially met by longerhaul Suezmax voyages from Wide Arabian Sea and South Atlantic
The Russia–Ukraine war triggered a structural shift in trade flows as discounted Russian crude flooded Asia, displacing West Africa and Middle Eastern barrels
➔ This readjustment led to a steady decline in average Suezmax voyage mileage
Recently, India and China emerged as regional buyers of accessible barrels from the MEG and the Atlantic
➔ Supported by FOB terms, buyers split VLCC stems into Suezmaxes when VLCC supply is tight to retain scheduling flexibility
➔ Uptick in Suezmax liftings from MEG to WCI contributing to sustained fleet utilisation, pushed voyages into Pacific Basin to the highest level since the start of the invasion
➔ Suezmax MEG-WCI freight surged by 20% to 10.3 $/t (WS 135) between mid and end-March (Argus), highlighting tightening supply and strong short-haul program demand
Clean – East of Suez: Soft demand weighs on clean tankers in recent quarters, but rates trajectory seems to bottom out
Clean tanker demand over the past 3 years is largely driven by longer voyage distances, influenced by refinery inefficiencies/closures, geopolitical disruptions, and canal closures
➔ While overall volumes remain at or below 2019 averages, tonnemile demand has exceeded 2019 levels across MR2s and LR2s
➔ However, over the last two quarters, a decline in CPP flows— driven by softer demand, refinery maintenance and outages, which has led to less products at sea
However, rates have likely bottomed out:
➔ Rising geopolitical tensions and uncertainty, alongside potential tariff implications, are reshaping trade flows and extending voyage distances, which would support freight rates
➔ Post refinery maintenance season, there could be some comeback flows, supporting clean freight
Dirty – West of Suez: Tightening tonnage in Gulf of Mexico and higher employment in Canada EC boost Aframax rates, for now
TD25 (Gulf of Mexico-to-Europe) freight rates rose to $41.3/t at close of March, from $34.5/t at end of February
➔ Gulf of Mexico tonnage tightens, with Aframaxes ballasting to GoM falling 50% m-o-m
➔ Aframax voyages out of Canada EC in March 2025 jumped 67% mo-m, with over 70% of voyages servicing the Canada EC-to-Europe trade flow
Canada EC crude sent to further afield destinations could boost Aframax tonne-mile demand in the Atlantic
➔ The flow could continue as Aframaxes ballasting to Canada EC rising by 50% since beginning of March
Tariff implementation would be a net positive to Aframax employment and tonne-mile demand, but this upside could be capped by evaporating European crude demand
➔ Underpinned by softening seaborne crude imports into Europe and inventory build-ups over the last 2 months
➔ For more details, see this week’s EMEA/Americas market briefing
Clean – West of Suez: Rising NW Europe CPP loadings push TC2 rates up to six-month highs
Northwest Europe CPP loadings are on the rise pushing TC2 (Europe-toPADD 1) rates up to recent six-month highs after falling back down in the last few days
➔ The surge in rates is partially due to the opening gasoline arb to the USAC amid limited vessel supply availability
➔ Higher diesel loadings are staying within Europe, especially the Meditarranean due to unplanned and extended turnarounds
➔ Higher gasoline loadings from NW Europe are headed toward WAF
➔ Dangote’s ongoing domestic currency disputes and looming RFCC maintenance June 01 (various market sources) will likely hike gasoline imports further
As we approach April 02 and the expected tariffs that the US will place on energy exports from Canada and Mexico, we could see Canadian CPP move towards Europe while Mexico turns toward Europe for CPP imports
➔ This will provide stimulus for tonne-miles and hence an upside for TC2 rates in comparison to TC14 (Gulf of Mexico-to-Europe)
Data Source: Vortexa