In December, the tanker market showed a positive momentum as its spot freight rates rose across both
clean and dirty sectors. Dirty tanker rates continued to increase in December, as they had in the past
few months. The average freight rates for VLCC, Suezmax and Aframax went up by 18%, 25% and
1%, respectively, from a month before. These higher rates were driven by several factors, but the most
important were delays in eastern ports and uncertain discharge programmes. Additionally, increased
pre-holidays activities and thinning tonnage supply in some areas also contributed towards the
increase in spot freight rates. Similarly, the clean market showed higher monthly freight rates on all
reported routes, also reflecting gains from those registered a year ago on both directions of Suez.
In December, OPEC spot fixtures increased by 5.7% from the previous month to average 11.73 mb/d,
according to preliminary data. Higher spot fixtures were registered from the Middle East-to-Western
destinations, which increased by 0.55 mb/d in December to average 2.9 mb/d. Seasonal winter demand
supported the fixture increase in December. Spot fixtures from outside the Middle East registered a
gain of 0.49 mb/d, or 18%, in December, compared with one month earlier.
Sailings and arrivals
OPEC sailings increased by 0.06 mb/d, or 0.3%, in December to stand at 24.07 mb/d, accompanied by
a rise in Middle East sailings. In December, Middle East sailings gained 0.16 mb/d, or 9%, from the
previous month to stand at 17.52 mb/d. Crude oil arrivals increased in December in all areas with the
exception of arrivals at Far East, which showed lower arrivals by 0.26 mb/d, or 2.9%, from a month
earlier. Arrivals in North America, Europe and West Asia went up by 4.2%, 0.2% and 7.1%,
respectively, compared with the previous month.
Spot freight rates
VLCC market activity was mostly steady in the month of December, as chartering activities in both
Middle East and West Africa led to a further reduction in the amount of available vessels. Vessel supply
was already tightening as a result of increasing delays in Indian and eastern ports due to weather
delays and ullage limitations, which together added to the increasing discharge delays. This thus
supported the increase in freight rates and resulted in sharp gains in daily earnings. The uncertain
situation helped ship owners of secured itinerary vessels, allowing them to have the upper hand in the
market, while pushing for higher rates, mainly for Middle East loadings. The third week of December,
however, showed a decline in activities, which combined with a downward movement of rates as
charterers seemed to be holding their requirements in order to counter the increasing sentiment in
rates. In December, VLCC spot freight rates for tankers operating on the Middle East-to-West showed
the highest gains among other routes increasing by 26% from the previous month to stand at
WS49 points. This was followed by freight rates registered for tankers in the Middle East-to-East routes,
which increased by 19% m-o-m.
VLCC spot freight rates for tankers trading on the West Africa-to-East routes increased by WS9 points,
or 14%, in December. All rates registered on the reported routes remain 3% to 9% below those of the
same month in 2016.
In December, Suezmax spot freight rates registered remarkable gains on a monthly and annual basis.
On average, Suezmax spot freight rates climbed by 25% compared with the previous month and by
22% from the same month a year earlier.
The West African Suezmax market had a very quiet start at the beginning of the month with a wide
supply of vessels. These vessels were initially considered a threat to potential gains in the VLCC sector
market, as they could be suitable replacements for VLCCs once the difference in rates justifies a split
cargo. Similarly, Suezmax requirements in the Middle East were thin at that point and its freight rates
remained low. The low freight rates also persisted in other regions at the beginning of the month as
transactional delays in the Turkish Straits by up to eight days were not enough to support freight rates
in the Black Sea.
Suezmax rates improved dramatically in the second week of the month, with gains driven by significant
improvements in loading requirements across different regions. This resulted in a notable thinning in
vessel supply. Nevertheless, the amount of enhancements varied as they remained moderate in the
Mediterranean and the Black Sea, despite continuous transactional delays. In West Africa, freight rates started to rise, as the tonnage list tightened and the replacement requirements occurred with some
delays reported. In the Caribbean, the Suezmax market also witnessed higher rates as a result of
higher trends created by the Aframax vessels in the region. Accordingly, average spot freight rates for
tankers operating on the West Africa-to-US route increased by WS21 points in December to average
WS94 points. On the Northwest Europe-to-US route, Suezmax spot freight rates increased by 20%
compared with a month earlier, to average WS76 points.
Aframax spot freight rates were no exception in December, showing gains from the previous month
though these remain less than those registered by the larger tanker sectors of the market.
The Caribbean Aframax market was active and the pre-holiday rush saw the level of transatlantic
inquiries grow in combination with increased weather delays, leading to firmer sentiment, allowing ship
owners to push for higher rates (mainly for prompt replacements). As a result, spot freight rates for
tankers operating on the Caribbean-to-US East Coast (USEC) went up by 9% in December to average
WS173 points, WS115 points higher than those in the same month of the previous year. Aframax
freight rates in the East reported an increase as well, with spot freight rates for tankers operating on the
Indonesia-to-East route showing an increase of 30% from the previous month to average
Following the massive gains in the Mediterranean markets achieved by the Aframax sector in
November, freight rates the following month cooled off, showing a decline as more vessels were added
to the position list and the situation balanced. The Aframax market in the Mediterranean remained
balanced with all pre-holiday requirements covered easily. Therefore, tankers operating on the
Mediterranean-to-Mediterranean and Mediterranean-to-Northwest Europe routes saw drops in spot
freight rates of 14% and 11% during December to stand at WS115 points and WS114 points,
respectively. However, those drops remain relative to the increase in rates achieved one month before.
Clean spot freight rates
Clean tanker spot freight rates shared the tanker marketís upward momentum, reflecting higher freight
rates on all reported routes in December with no exception.
In the East, clean tanker spot freight rates from the Middle East-to-East experienced a hike of 19%
compared with the previous month. The increase in market activity was only witnessed during the
second half of December, giving medium-range vessel owners the chance to push for higher rates as
vessel supply tightened. Clean spot freight rates for tankers trading on the Middle East-to-East and the
Singapore-to-East routes increased by 18% and 20%, respectively.
West of Suez, clean tanker spot freight rates increased as rates edged up for tankers of different sizes.
The transatlantic clean tanker market firmed as a result of higher loading requirements. Spot freight
rates for tanker operations on the Northwest Europe-to-USEC and US Gulf Coast increased by 11%, to
average WS121 points in December.
In the Mediterranean, clean spot freight rates increased in December compared with the previous
month, partially on the back of voyage delays. Clean spot freight rates for tankers trading in the
Mediterranean-to-Mediterranean route rose by 33% in December compared with a month earlier, to
average WS173 points, and clean spot freight rates for tankers operating on the Mediterranean-toNorthwest
Europe route gained 30%, to stand at WS183 points. On average, spot freight rates
registered in both East and West of Suez showed an annual increase of 2% and 18%, respectively