Crude oil tanker market sentiment weakened in April as average spot freight rates dropped on most reported routes. On average, dirty tanker freight rates were down 8% from the month before. Despite a stronger market seen in the VLCC sector, average dirty spot freight rates declined, influenced by the declines in Suezmax and Aframax freight rates. VLCC spot freight rates showed improvements, rising by around 17% on all reported routes, as a result of an active market and strong tonnage demand. Suezmax and Aframax both closed the month down by 15% and 12%, respectively, as demand for both classes remained weak amid a persisting tonnage oversupply.
Following the drop seen last month, OPEC spot fixtures dropped in April by 4.2%. The decline came mainly on the back of lower fixtures registered for both eastbound and westbound destinations, while global fixtures declined by 2.9% from a month earlier. Compared with a year ago, OPEC and spot global fixtures were down by 11.2% and
Sailings and arrivals
OPEC sailings were also lower in May, dropping from the previous month and a year
earlier by 1.2% and 2.2%, respectively. According to preliminary data, arrivals into
North America and West Asia increased by 0.7% and 3.6%, respectively, from the
month before, while arrivals into the Far East and Europe declined by 0.5% and 3.1%
from the previous month’s arrivals.
Spot freight rates
Contrary to the other vessels in the dirty segment, VLCC freight rates increased in April
from the previous month, rising by 17%. The increase, which came as an average of
gains achieved by VLCC trading on all reported routes, came mainly on the back of
higher activity seen following the Easter holidays, coupled with a tighter tonnage list.
The higher freight rates in the Middle East drove the increase in tonnage for West
Africa loadings mainly to eastern destinations as the West African market mirrored the
Middle East tonnage market. On a monthly comparison, spot freight rates for VLCCs
operating from the Middle East-to-East increased by 18% to average WS62 points,
while those from the Middle East-to-West ended the month up by 17% to average
WS34 points. Similarly, the monthly average freight rates for VLCCs operating on the
West Africa-to-East route increased by 17% in April to average WS60 points. Despite
being volatile during the month, West African tonnage demand remained generally
strong. VLCC ship owners showed great resistance to lower freight rates in a trial to
maintain their gains from dropping as the tight availability situation eased. On an
annual basis, freight rates for tankers operating on the Middle East-to-East and West
Africa-to-East routes increased by 52% and 43%, respectively, from the same month
In contrast, Suezmax freight rates encountered losses from the month before.
Insufficient market activity during the holidays leading to increased availability,
supported the rate drops encountered during the month. In April, spot freight rates for
Suezmax trading from West Africa-to-USGC dropped by 19% over the previous month
to average WS73 points. Spot freight rates for vessels operating on the Northwest
Europe-to-USGC route dropped by 10% to average WS64 points. Although Suezmax
monthly average spot freight rates dropped m-o-m, Suezmax freight rates did
experience occasional gains due to higher activity on the West Africa-to-West route
and premiums paid for prompt loadings in the North Sea. Despite the monthly drop,
spot freight rates for both routes remained higher than the same month a year ago.
In the Aframax sector, spot freight rates dropped on all reported routes with no
exceptions. Although the Aframax market experienced high freight rates at the
beginning of April, as a result of a pre-holiday rush, freight rates declined afterwards,
mainly in the North Sea and the Baltics. The Aframax market in Northwest Europe was
firm earlier in the month before rates dropped as a result of an increasing tonnage
build, which effected freight rates on several routes in April. Aframax spot freight rates
were under the influence of the limited cargoes on the market, while tonnage supply
remained mostly abundant. Consequentially, Aframax Caribbean-to-USEC spot freight
rates dropped by 18% from the previous month to average WS140 points, while freight
rates for vessels operating on the Mediterranean-to-Mediterranean and Mediterraneanto-
Northwest Europe routes experienced lesser declines as they dropped by 10% each
to average WS105 and WS98 points, respectively. The rate on the Indonesia-to-East
route experienced the lowest decline amid other reported routes in April as it fell by 5%
to average WS99 points.
Clean spot freight rates
In the clean tanker sector, spot freight rates were mixed as they increased on most
reported routes with some exceptions. Contrary to the previous month, the clean tanker
market was quiet for tankers of all sizes during April as mainly eastbound fixtures
showed lower freight rates than last month.
In East of Suez, low naphtha tonnage demand negatively affected freight rates for
tankers operating on the Middle East-to- East route, which declined by 11% to average
WS114 points. At the same time, increasing vessel supply, mainly in the long-range
(LR) classes, was also a driver of the decline in freight rates, while rates for the
Singapore-to-East route increased by 4% in April, compared to the previous month.
In the West of Suez, the clean tanker market got busy following the holidays, and rates
mainly increased in the Mediterranean and Black Sea, supported also by port delays.
Therefore, freight rates seen on the Mediterranean-to-Mediterranean and
Mediterranean-to-Northwest Europe routes increased by 12% and 11% to average
WS202 points and WS212 points, respectively. While LR1 freight rates were influenced
by limited gasoline tonnage demand, freight rates for tankers trading on the Northwest
Europe-to-USEC route dropped by 16% to average WS142 points