This week’s special focus is on the growth of VLCC AG supply for the first two weeks of September, as depicted in the left chart. The data shows promising signs of increasing supply, while WS rates are striving to establish firmer momentum. On the cargo side, illustrated in the right chart, the outlook appears more challenging. Recent activity continues to fall significantly below the demand benchmark, leading to uncertainty about the market's direction in the coming days of September.
The current imbalance between the supply of vessels and cargo demand raises concerns about the potential for a decreasing spread that could impact market firmness. As we approach the end of the third quarter, it remains to be seen whether this imbalance will correct itself or persist, influencing the stability and firmness of the freight market moving forward.
This week, the oil market saw news of an increase in crude oil production from Saudi Arabia. Saudi Arabia is anticipated to boost its crude oil supply to China in October, following a recent price cut for its oil sold in Asia. This move comes as the world's leading crude exporter seeks to strengthen its market share amid fluctuating global oil dynamics. According to trade sources cited by Reuters, the Kingdom plans to ship a total of 46 million barrels of crude to China next month, an increase from the estimated 43 million barrels expected to arrive in September.
This anticipated rise in supply reflects increased demand from China’s largest state-owned refiners, Sinopec and PetroChina. Both companies have reportedly requested additional volumes from Saudi Arabia to meet their refining needs for October. The adjustment in supply levels underscores the strategic role of Saudi Arabia in balancing global oil markets and responding to the evolving needs of major importers like China. As these developments unfold, they could have significant implications for regional oil trade and pricing dynamics.
For more information on this week's freight supply and demand trends, see the analysis sections below. You can also log in to our Newsroom page under Insights & News to stay updated with the latest reports.
Sentiment in the dirty freight market appears to be firming in the second week of September; however, current levels remain only marginally above the lows recorded during the summer season.
The VLCC MEG-China freight rates rose to 50 WS, a weekly increase of 8%, and up 47% compared to the same week last September.
Suezmax freight rates for shipments from West Africa to continental Europeclimbed to 80 WS, reflecting an 8% increase compared to a month ago. On the Suezmax Baltic-Mediterranean route, rates have shown a relatively steady trend since the first week of September, also reaching 80 WS, marking a 3% increase on a weekly basis.
Aframax Mediterranean freight rates are currently hovering around WS120, reflecting a 37% increase compared to the same week last year.
‘Product’ WSLR2 Weaker
LR2 AG freight rates are currently hovering around WS125. This marks a 9% drop over the past month and a 11% decrease compared to the same week last year.
LR1 Weaker
Panamax Carib-to-USG rates have dropped to WS148, marking a 20% decline from the levels recorded just a month ago.
‘Clean’ MR Mixed
MR1rates for shipments from the Baltic to the continent have reached WS180, reflecting a 24% monthly increase, while they remain 8% lower compared to the same period last year. Meanwhile, MR2 rates for shipments from the Continent to the USAC are steady around WS120, reflecting a 2% week-over-week increase and maintaining a similar momentum to the previous year. On the USG-Continent route, MR2 rates have hovered around WS145, consistent with last month's levels. However, this represents a notable 45% increase compared to the same period last year.
SECTION 2/ SUPPLY
‘Dirty’ (# vessels) - Mixed
The supply of crude tankers showed an upward trend in the second week of September, exceeding the annual average on both the Suez West Africa and Aframax Mediterranean routes. In contrast, a downward trend was observed for VLCC activity on the Ras Tanura route.
VLCC Ras Tanura: The number of ships has now dropped to 66, falling below the annual average and marking a decline of nearly 12 compared to levels observed two weeks ago.
Suezmax Wafr: The current ship count stands at 62, confirming signs of an increase above the annual average of 60. This week's levels are 12 ships higher than three weeks ago.
Aframax Med: The number of ships has increased to 13, surpassing the annual average and representing nearly a 50% rise compared to four weeks ago.
Aframax Baltic: Since the end of week 32, there has been a downward trend, with current levels at around 23, 10 below the annual average.
'Clean' LR2 (#vessels) - Decreasing
MR (#vessels) - Mixed
Clean LR2 AG Jubail: A downward trend has been observed in the first two weeks of September, with vessel numbers recently dropping to 7. This decline reflects a persistent trend, with activity consistently falling below the annual average since the peak recorded at the end of week 29.
Clean MR: At Algeria’s Skikda port, MR1 activity, which surged last week, dropped to 29 vessels in the second week of September, nearly 10 fewer than the total recorded at the end of week 35. Meanwhile, in Amsterdam, MR2 activity has seen a gradual and notable increase since the end of week 34, recently reaching 56 vessels, which is approximately 26 above the annual average.
SECTION 3/ DEMAND (Tonne Days)
‘Dirty’ Decreasing
Dirty tonne days: The decrease in VLCC tonne-days growth has persisted through the first half of September, raising uncertainties about the long-term stability of firmness for dirty freight rates. This decline reflects a weakening demand for VLCCs, contributing to market volatility. Similarly, Suezmax tonne-days growth continues on a downward trajectory, amplifying concerns about sustained softness in this segment. In contrast, Aframax tonne-days growth is showing stronger signs of resilience, with potential for more stable or even rising freight rates in the near term. However, the overall market outlook remains uncertain as the contrasting trends across these tanker classes could signal a more complex supply-demand dynamic emerging in the weeks ahead.
‘Clean’ Decreasing
Panamax tonne days: The growth rate posted a weekly percentage increase from the low observed in week 30, though it remains below the annual average. For clean MR tonne-days, the growth rate for both MR1 and MR2 vessel sizes has continued to decline, remaining below the annual average. This sustained downward trend indicates a significant slowdown in demand for these vessels. In fact, recent levels have dropped to their lowest point this year, suggesting that market conditions for clean MR tankers are under considerable pressure.
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