Rising mainstream tanker penetration in Western Russian crude trades supports Aframax rates in July

Western Russian crude trades saw a notable increase in Western-insured Aframax participation in July, alongside higher regional crude exports. These developments supported commercial Aframax freight rates, although early-August corrections suggest that momentum may be fading. Looking ahead, geopolitical developments, crude price movements and the availability of Atlantic tonnage will remain key factors shaping regional rates and the broader Aframax market outlook.

‍

Key Takeaways:

• Western-insured Aframax penetration of Russia trade rebounded sharply in July, reaching 40%, supporting higher Russian crude exports and reducing Russian freight rate premiums.
• Counter-seasonal Russian crude export growth, driven by lower refinery runs, strengthened Aframax demand and supported commercial North East Atlantic Aframax benchmarks.
• Early-August TD19 (Cross Med) rate correction and renewed Urals prices above $60/bbl raise doubts over sustained mainstream fleet penetration into Russian trades.
• Despite geopolitical upside risks, Atlantic Aframax oversupply remains the key structural constraint, with clean-to-dirty switching limiting the rally’s duration.

The penetration of Western-insured tonnage in Western Russia’s crude trades, excluding CPC Kazakhstan, rebounded to 48% of total traded volumes in July, marginally surpassing the February 2026 high recorded ahead of the outbreak of the US-Iran conflict and the subsequent spike in crude oil prices. The composition of this increase, however, differed from that observed in February. While the earlier peak was primarily driven by Suezmax activity, a segment in which Russia has traditionally maintained greater exposure to Western-insured tonnage, the July increase was also supported by Aframax employment.

Unlike Suezmaxes, Western Russia’s exposure to G7+-insured Aframaxes collapsed in August 2025 following the introduction of the EU’s 18th sanctions package, which lowered the price cap for the first time and sought to close the loophole around imports of refined products produced from Russian feedstocks. Since reaching a low of 18% in December, exposure has steadily recovered, rising to 40% over the past month. This increased participation has, in turn, significantly reduced the premium of Western Russian freight rates over commercial freight rates, which appears to have been an important incentive for attracting new tonnage into these trades.

Share of Western-Insured tonnage in West Russia’s Crude Trades

Source: Kpler, Argus Media

A concurrent, counter-seasonal increase in Western Russian crude exports has amplified the impact of higher Western-insured Aframax penetration. This appears to be linked to the intensification of Ukraine’s drone campaign against Russian refining infrastructure and the resulting decline in the latter’s refinery run rates, allowing a greater share of crude production to reach the water. Consequently, Western Russian crude volumes carried on Western-insured vessels rose to circa 615 kbd in July, offering employment for approximately 26 Aframax vessels across the month.

West Russia’s Crude Trades on Western-insured Aframaxes (kbd)

Source: Kpler

‍

The increased penetration of commercial Aframax tonnage in Western Russian crude trades during July was a key contributor to the strength observed in North East Atlantic Aframax benchmarks over the month. This coincided with a monthly increase in crude exports from Libya and Egypt, alongside higher DPP exports from the Mediterranean following the redirection of Iraqi DPP volumes to Syria by truck. As a result, total dirty Aframax loadings in the region exceeded the 5.0 Mbd mark across June-July, the first time this threshold has been reached since July 2025. Beyond underlying fundamentals, spillover risk premia associated with military activity in the Black Sea provided additional support to regional Aframax assessments.

Mainstream Aframax dirty trades in North-East Atlantic

Source: Kpler, Baltic Exchange

The outlook for the recent rate momentum is becoming less certain. In the first days of August, TD19 rates corrected to $4.00/bbl, down from $6.11/bbl in the final decade of July, raising questions over whether the regional rally can be sustained into late Q3. Mainstream fleet employment in Russian trades is increasingly challenged by the renewed spike in oil prices following the collapse of the Iran-US MoU and the expansion of hostilities into the Red Sea. Urals FOB assessments fell into the $40-50/bbl range in late June and early July, facilitating under-the-cap trades, but have since moved back above $60/bbl, pointing towards potentially lower mainstream fleet penetration going forward. The reduced financial incentive for shippers to engage in Russian trades also supports this view.

Importantly, however, the increase in mainstream fleet penetration in Western Russian trades predates the decline in Urals assessments into the price-cap range. This suggests that published price indices may be providing diminishing visibility into the pricing of individual deals. Conversely, renewed discussion around a potential US-Iran agreement could once again ease global crude prices, potentially restoring the economics of mainstream Aframax employment in Western Russian crude trades.

Other Geopolitical developments remain a key variable for the regional Aframax outlook. A sustained Ukrainian offensive in the Black Sea could result in a prolonged halt to CPC loadings, reducing regional cargo availability while intensifying spillover pressure from Suezmaxes. Conversely, a redirection of Saudi Arabian crude towards Western markets and Europe, should the Houthi blockade persist, could increase Aframax liftings from the Sumed pipeline towards Europe. However, the pipeline’s predominant use by VLCCs, combined with the economic incentives favouring larger cargo sizes on European routes, is likely to constrain the scope for a sharp increase in Aframax demand.

The primary structural challenge for both the region and the wider Atlantic, however, remains an oversupplied Aframax market, driven by intensified clean-to-dirty switching. With a reversal in this trend unlikely for as long as the Strait of Hormuz crisis persists, the extent and duration of any Aframax rate rally will ultimately depend on how quickly the fleet can reposition to capture the higher earnings available in stronger markets.

‍