Dirty tanker market sentiment showed an improvement in May compared to a
month ago in all classes unlike the usual trend at this time of the year. The
higher freight rates were seen on many routes, especially for larger vessels. In
May, VLCC spot freight rates experienced an average gain of 15% over the same
month in 2014, driven by high tonnage demand and a firmer market in several
regions, mainly Middle East and West Africa. Similarly, Suezmax and Aframax
tankers met with higher demand by eastern and western charterers. The increase
in chartering activities, combined with tighter tonnage supply, led to an increase
in rates seen on a monthly basis and on a larger-scale compared to previous
Clean spot freight rates showed a mixed performance in May. Rates reported a
decline, averaging 12% from the previous month, as the market was affected by
excess tonnage availability, while the amount of market activity remained
insufficient to alleviate the imbalance.
In May, OPEC spot fixtures increased by 1.1 mb/d, or 10%, compared with the previous
month to stand at 12.21 mb/d. Moreover, all chartering activities worldwide showed an
increase from the month before with no exception. Fixtures from the Middle East-to-
East and Middle East-to-West routes experienced an increase of 5.9% and 25.3%,
respectively. Generally, global oil spot fixtures were up in May by 0.93 mb/d to average 17.26 mb/d compared with the previous month.
Sailings and arrivals
OPEC sailings increased by 0.48 mb/d, or 2.1%, in May from a month ago and by
0.36 mb/d from a year before. Sailings from the Middle East also went up from last
month by 0.48 mb/d and from last year by 0.35 mb/d. According to preliminary data,
arrivals at main importing regions in North America, Europe and West Asian ports
showed an increase from a month earlier as arrivals in the three regions went up by
1%, 2.9% and 0.3%, respectively, from last month. In contrast, vessels arrivals in the
Far East showed a decline from last month by 2.4%.
Spot freight rates
VLCC spot freight rates increased on all reported routes in May from the previous
month, with freight rates on Middle East-to-West route experiencing the largest gains of 28% to stand at WS43 points.
Spot freight rates registered on the Middle East-to-East route showed a lesser gain,
increasing by 13% to average WS70 points, while the West Africa-to-East route
showed an increase of 10% from the previous month to average WS66 points. VLCC
freight rates increased in May, despite the quiet beginning seen early in the month as
the position list was balanced, and the level of fixtures and inquiries kept weak.
However weather delays in Asian ports increased chartering activities while the
tonnage supply was tightening. The first decade fixtures for the month of June brought
a rush of activity to the market, mainly in the Middle East, which resulted in pushing
freight rates sharply to unusual levels for this time of the year. The general
improvement seen on the VLCC market was registered mainly towards the second half
of the month. Afterwards, the charterer’s trials to halt a further increase in rates paid off
and freight rates stabilized as VLCC activities and rates eased off towards the end of
the month. From an annual perspective, VLCC freight rates in May showed a remarkable gain from the same month a year ago.
Similarly, Suezmax freight rates followed the VLCC freight rates trend in May showing
worthwhile gains on both an annual and monthly basis. Equally, Suezmax had a slow
start in the beginning of the month with freight rates softening, mainly in West Africa.
Low rates and activities were also noticeably seen in the Black Sea and Asia in the
beginning of May. The low freight rates came on the back of ample tonnage availability
even for prompt loadings. Similar to what was seen in the VLCC sector, Suezmax
freight rates improved afterwards as the position list started to tighten gradually,
subsequently leading to significantly higher rates. The firmer Suezmax market in West
Africa had an influencing effect on rates in the Mediterranean/Black Sea. In May,
Suezmax freight rates were supported by rising rates for both VLCC and Aframax.
Consequently, freight rates for tankers operating on the West Africa-to-US route went
up by 28% to average WS93 points, while rates for operations on the Northwest Europe-to-US route saw lesser gains, up by 18% to average WS75 points.
Aframax freight rates were mixed in May. The most reported routes showed an
increase in freight rates from a month before. The greatest increase was seen on the
Indonesia-to-East route which went up by 17% from last month to average WS116
points. Generally, the Aframax market was strong in May, with higher freight rates and
activities exhibited on many routes during the month, despite fluctuating tonnage
demand. In the Mediterranean, freight rates increased as activities remained healthy
and relatively stable. Port delays earlier in the month and bad weather conditions
partially supported freight rates. Therefore, freight rates for tankers operating on both
Mediterranean-to-Northwest Europe and Mediterranean-to-Mediterranean routes rose
by 10% and 9%, respectively, from April, to average WS107 and WS115 points. This
was also affected by requirements for replacements and a firmer market for the North
Sea and Baltics.
On the contrary, the only negative freight rate performance in the Aframax class was
registered on the Caribbean-to-US route, where freight rates dropped by 21% from the previous month to stand at WS111 points.
Clean spot freight rates
Clean tanker market sentiment was weak in May. On average, clean spot tanker freight rates dropped by 12% from the month before to stand at WS143 points.
In the West of Suez, freight rates dropped on average, despite higher freight rates
registered by medium-range tankers operating on the Northwest Europe-to-US East
Coast, which went up by 13% to average WS161 points. The main driver behind the
freight rates drop in the West was lower freight rates in the Mediterranean, as waning
activities during the month kept dragging rates down, reflecting a decline of 30% and
28%, respectively, on both Mediterranean-to-Mediterranean and Mediterranean-to-
On the other hand, East of Suez average clean spot freight rates increased by a slight
WS2 points on average, or 2%, mainly on the back of improved performance of tankers trading on the Middle East-to-East routes which increased by 6% from a month before.