Global spot fixtures increased by 9% in July compared to the previous month. OPEC spot fixtures continued the upward movement in July, rising by 11% compared to the previous month. The increase was mainly driven by Middle East to East fixtures as many Asian refineries start to enquire tonnage for their August requirements. Middle East to West fixtures declined by 6% in July compared to last month partially on end of summer season long haul tonnage demand. OPEC sailings were steady in July with a minor decrease of less than 1% compared to the previous month. OPEC sailings in July indicated a drop of 4%, when compared to the same period a year ago. Middle East sailings remained steady in July from the previous month with a minor decline, according to preliminary data. Initial estimates indicate Far East and West Asia arrivals decreased by 4% and 5% respectively and Europe arrivals gained 2% in July compared to previous month. US arrivals remained flat in July compared to last month.
Dirty tanker sentiment remained bearish in July compared to the previous month as result of tonnage over-supply, refinery and field maintenance, and lower trade activities. In the clean freight market, rates declined in July relative to last month. Refinery maintenance in Asia lowered product exports that depressed clean rates in East of Suez while closed arbitrage dragged down West of Suez. In July, dirty spot freight rates edged down by 2% and clean rates decreased by 4% compared to the previous month. VLCC spot freight rates declined 11% on average on all reported routes in July compared to the previous month. From the Middle East, VLCC long-haul spot freight rates to eastbound and westbound destinations fell 14% and 4% respectively. Rates from West Africa to the East also declined by 13% in July compared to previous month.
The decline of VLCC spot freight rates from both Middle East to East and West Africa to East was driven by the heavy maintenance across Asia during June-July. The decline of VLCC spot freight rates from Middle East to West was partially due to the IEA crude oil stock release and spillover of excess tonnage left by lower demand from Asia. Compared to a year ago, spot freight rates for VLCC from Middle East to East and from West Africa to East as well as Middle East to West are down by 16%, 22% and 13% respectively, reflecting the weakness of VLCC tankers this year. Suezmax spot freight rates remained flat on average on all reported routes in July compared to the previous month. On the West Africa to US Gulf Coast (USGC) route, Suezmax spot freight rates gained 8% in July from the previous month, while on Northwest Europe to USGC route, spot freight rates decreased by the same rate.
Higher lifting of West African crude to Europe due to various fields’ maintenance and shutdowns in the North Sea as well as West African crude oil premiums to Dated Brent affected tonnage availability from West Africa to the US and supported spot freight rates. The release of IEA crude oil stocks, mostly in the US, as well as the premium of Brent to WTI, limited trade between the US and Western Europe in July and negatively affected spot freight rates on the Northwest Europe to US route. Closed arbitrage of fuel oil added more pressure on Northwest Europe to USGC spot freight rates. Compared to last year, West Africa to USGC and Northwest Europe to US East Coast – USGC spot freight rates dropped 12% and 25% respectively, underscoring the weakness of the Suezmax sector.
Aframax spot freight rates declined in July by 3% on average, with both West of Suez and East of Suez spot freight rates decreasing from the previous month. East of Suez, refinery maintenance across Asia as well as the continuing shutdown of some of capacity in Japan on the effect of the earthquake reduced spot freight rates on the Indonesia to East route. West of Suez, spot freight on Caribbean to US East Coast gained 3% on the back of higher trade activity between Latin America and the US. In the Mediterranean, both Mediterranean to Mediterranean and Mediterranean to Northwest Europe Aframax spot freight rates declined by 6.5% and 7.4% respectively, compared to the previous month. Tonnage oversupply due lower trade activities from Baltic Sea and North Africa were partially behind the decline of spot freight rates. Compared to last year, Aframax spot freight rates on average were down by 20% in July.
Clean tanker market sentiments weakened further in July, with East of Suez spot freight rates experiencing a decline of 1.4% and West of Suez dropping 2.2%. Lower product output in Asia on the back of refinery maintenance and closed transatlantic arbitrage were the main factors behind the weakness in the clean tanker market.
In the East, Middle East to East spot freight rates in July remained flat and Singapore to East rates declined by 3%. Balanced trade activities on naphtha from Middle East to East are behind the unchanged rates from Middle East to East. Singapore to East clean spot freight rates continued to be under pressure from the Japan earthquake and closed down by 3%. Northwest Europe spot freight rates were depressed by the lower transatlantic activities due to closed arbitrage and lower gasoline imports from the US.
Clean spot freight rates from Northwest Europe to the US declined by 5% in July compared to the previous month. In the Mediterranean, clean spot freight rates for tankers operating the Mediterranean to Mediterranean and Mediterranean to Northwest Europe routes declined by 4% and 3.8% respectively. Lower naphtha trades as well as lack of arbitrage opportunity to move diesel and naphtha were behind the drop. In West of Suez, only Caribbean to US Gulf Coast spot freight registered gain of 3% in July compared to the previous month. The gain in clean spot freight rates was supported by higher diesel and gasoline demand in Latin America from the US. Jet fuel demand in Europe from the Caribbean further supported clean spot freight rates from the Caribbean to the US.