The rebound in VLCC rates since the record low of 2023

VLCC tanker rates from the Gulf of Mexico to Europe and Asia are beginning to recover after a year of sharp declines, due to fluctuating demand for crude oil.

Partagez:

Rates for Very Large Crude Carriers (VLCCs) from the Gulf of Mexico have shown a slight recovery since August 2024, after reaching historically low levels.
In September, the rate for a VLCC bound for the Mediterranean was $3.05 million, compared with $2.3 million in August.
This improvement remains moderate and does not fully offset the decline recorded since the end of 2023.
The crude shipping market, particularly on transatlantic routes, is affected by an abundant supply of vessels and uncertain global demand for US crude. Demand for VLCCs had been falling throughout 2023 due to the volatility of global oil markets, exacerbated by increased competition from new exporters.
Moreover, freight rates for mid-sized tankers, such as Suezmaxes and Aframaxes, also followed this downward trend, recording historically low levels over the same period.

A tense global market

The global crude oil transport market is marked by fluctuating demand, particularly in Asia, which remains a crucial factor in the evolution of VLCC tariffs.
In 2024, Chinese crude imports show a slow recovery from the pandemic, with levels below initial forecasts.
In August and September, crude exports from the Louisiana Offshore Terminal (LOOP) fell to less than 100,000 barrels per day (b/d), compared with peaks of 200,000 to 300,000 b/d earlier in the year.
The fall in Chinese demand is having a direct impact on the rates charged by VLCCs, which mainly transport crude oil to Asian markets.
However, some analysts anticipate an upturn in demand towards the end of the year, driven by seasonality and preparations for major events such as China’s National Day.
This could boost prices in the short term, but long-term uncertainties remain.

Oil fleet overcapacity

The surplus of ships on the international market continues to weigh heavily on freight rates.
VLCCs are not the only ones affected by this situation.
Aframaxes and Suezmaxes tankers are also seeing a drop in bookings in 2024 compared with 2023.
According to Commodity Insights data, the number of VLCCs booked for transatlantic routes from the Gulf of Mexico in September 2024 is three, compared with nine the previous year.
This trend shows a general decline in tanker bookings on this strategic route.
At the same time, US crude exports remain relatively stable, hovering around 4 million barrels per day (b/d).
However, export capacity in the Gulf of Mexico, which can reach 6 million b/d, is not being fully exploited due to weak demand from European and Asian markets, combined with high vessel availability.

Pressure on transatlantic tariffs

The transatlantic route from the Gulf of Mexico to Europe is showing signs of recovery, but rates remain under pressure.
Indeed, freight rates for VLCC tankers bound for Europe, after dropping to levels as low as September 2023, are on the rise again.
However, this increase is not enough to compensate for the structural weakness of the market.
Uncertainty surrounding global demand, particularly in Europe and Asia, keeps up the pressure on rates for VLCCs and other tanker classes.
In addition, the slow post-pandemic economic recovery in Asia, combined with geopolitical tensions, is weighing on crude oil demand projections for the months ahead.

Uncertain outlook for 2025

The oil market situation in 2025 remains unclear.
Chinese demand for crude oil, which plays a decisive role in oil price trends, could still disappoint forecasts, especially if economic recovery proves slower than expected.
In addition, the emergence of new export players, such as Canada, could intensify competition on Asian and transatlantic markets.
Analysts agree that VLCC tariffs are likely to remain volatile as long as the uncertainties surrounding global crude demand remain unresolved.
The evolution of tariffs will also depend on external factors, such as the energy policies of major importing economies and geopolitical conditions affecting major shipping routes.

The Texan Port of Corpus Christi has completed major widening and deepening work designed to accommodate more supertankers, thus strengthening its strategic position in the US market for crude oil and liquefied natural gas exports.
BP Prudhoe Bay Royalty Trust is offering its interest in Prudhoe Bay, North America’s largest oil field, as part of its planned dissolution, assisted by RedOaks Energy Advisors for this strategic asset transaction.
CNOOC Limited’s Hong Kong subsidiary and KazMunayGas have concluded a nine-year exploration and production contract covering nine hundred and fifty-eight square kilometres in Kazakhstan, sharing investment and operations equally.
Donald Trump announced that the United States will no longer oppose Chinese purchases of Iranian oil, immediately triggering a drop in global crude oil prices and profoundly reshaping international energy trade partnerships.
Research firm S&P Global Commodity Insights lifts its outlook for the fourth straight year, betting on three point five mn barrels per day from 2025 despite lower prices.
Enbridge plans to expand its infrastructure to increase oil transportation from the American Midwest to the Gulf Coast, anticipating rising exports and addressing current market logistical constraints.
US commercial crude inventories significantly decline by 3.1 million barrels, widely surpassing initial forecasts and immediately pushing international oil prices higher.
The UK could have hydrocarbon reserves twice as large as current official estimates, according to Offshore Energies UK, highlighting the impact of fiscal policies on forecasts and the economic future of the North Sea.
Following US strikes in Iran, international energy companies partially evacuate their teams from Iraq as a precaution, while Lukoil maintains its entire personnel on southern oilfields.
Chinese independent refineries remain cautious amid rising Iranian crude prices driven by escalating Iran-Israel tensions, potentially threatening access to the strategic Strait of Hormuz.
Gazprom, affected by a historic $6.9bn loss in 2023, is offering Pakistani state-owned firm OGDCL its petroleum assets in Nigeria to strengthen its presence in Asia’s energy market, according to Pakistani sources.
Donald Trump urges control of oil prices following U.S. military action against Iranian nuclear facilities, amid escalating tensions around the strategic Strait of Hormuz, threatening to significantly impact global markets.
PermRock Royalty Trust announces a monthly distribution of $539,693 to unit holders, impacted by reduced oil volumes and prices in April, partly offset by increased natural gas sales.
Permian Basin Royalty Trust announces a reduced distribution for June due to ongoing excess costs at Waddell Ranch properties and lower volumes from Texas Royalty Properties.
Three months after starting production, Norway’s Johan Castberg oil field, located in the Barents Sea, reaches its full capacity of 220,000 barrels per day, significantly increasing energy supplies to Europe.
The Middle East conflict forces Iraq to delay certain oil developments, disrupting field operations despite temporary stability in production and exports amid growing logistical tensions.
New U.S. estimates reveal nearly 29 billion barrels of oil and 392 Tcf of technically recoverable natural gas on federal lands, marking significant progress since the last assessment in 1998.
The United Kingdom tightens sanctions against Russia's oil sector by targeting twenty tankers operating in the "shadow fleet" and Rosneft Marine, amid rising crude prices exceeding the G7-imposed price cap.
French manufacturer Vallourec will supply Qatar with premium OCTG tubes in a contract worth an estimated $50 million, supporting the planned expansion of oil and gas operations by 2030.
SBM Offshore has secured an operations and maintenance contract from TotalEnergies for the FPSO GranMorgu unit, the first such project in Suriname, covering operational preparation and post-production maintenance for at least two years.