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Clean tanker rates lifted from multi-month lows last week. The fundamentals of the clean market were arguably not as bad as the decline in rates suggested so an increase was due. But, with over 40% of Russian clean exports since the EU ban heading to the Mediterranean and Black Sea, expectations rates will push on higher will be tempered
Chinese clean product exports hit a record high of 1.6 Mbd in November. Most of this was shipped on MRs, increasing demand by over 200% from September levels. Regional vessel supply has been insufficient and surging rates have helped pull in more vessels to service rampant demand. With the MR fleet more widely distributed, rates should stay elevated over the coming months.
Crude ton-miles began the year trending below the five-year average, but since VLCC exports began to rise in June, growth has been rapid. While the order of the major VLCC routes has been consistent compared with previous years, there have been upheavals in the Suezmax and Aframax markets following the Russian war in Ukraine. Crude tanker demand is on course to finish the year on a high, but the prospects for next year are less rosy.
Since the invasion, there has been an increase in the number of vessels operating in the Black Sea with lost AIS signals for one day or more, but there is no indication yet that this increase is linked to suspicious behaviour including covert ship-to-ship (STS) activity.
The Russian war in Ukraine is in its seventh day and financial sanctions on Russian individuals and banks are set to cripple the financial sector. Energy exports have not been the target of sanctions and even though the effect has made buyers and shippers wary, trade volumes have been unmoved so far as current loadings would have traded and had vessels fixed before the invasion. But, with Urals hitting a new record discount to Brent, finding buyers over the coming weeks is set to become increasingly difficult.
A case study showing how to use Kpler’s proprietary data for better analysis of long-term freight dynamics in the Asian LNG market
While a full ban on Russian oil exports would undoubtedly have a severe impact on the Russian economy, it would also cause widespread disruption to the global oil market. Europe would be the worst affected, relying on both Russian crude and product to a large extent.
Last week, we gave a webinar that focused on our expectations for US shale, Canadian and Gulf of Mexico oil production in 2022. We then leveraged these projections to forecast US crude exports for this year, as well as where that growth should come from.
Negative round trip rates are a clear signal of vessel oversupply in the Atlantic. With the arbitrage likely to favour Europe over the coming months the market could move even lower but a sustained period of below zero rates is unlikely to persist.
