Crude oil tanker market sentiment weakened in July, as average spot freight
rates declined on all reported routes. On average, dirty tanker freight rates were
down by 19% from the month before. Spot freight rates for VLCC, Suezmax and
Aframax vessels reached the lowest level seen this year so far. Despite a high
number of fixtures seen in the VLCC market, average dirty spot freight rates
declined, influenced by high vessel availability as new deliveries were reportedly
added to the fleet. Suezmax and Aframax freight rates also edged down by 18%
and 20%, respectively, from the previous month, due to limited demand for both
classes. Thus, freight rates weakened on all reported routes with no exception
amid persisting tonnage oversupply.
Clean tanker spot freight rates also developed negatively in July as mediumrange
(MR) tanker freight rates declined on all routes, with the only exception
being Middle East-to-East fixtures.
Following a drop seen the previous month, global spot fixtures increased in July by
0.4%. Gains came mainly on the back of higher fixtures registered for westbound
destinations, as Middle East-to-West fixtures rose by 0.62 tb/d in July, while OPEC
fixtures declined by 0.6% from a month earlier. Compared with a year ago, OPEC and
spot global fixtures were down by 3.4% and 0.3%, respectively.
Sailings and arrivals
OPEC sailings rose in July, increasing from the previous month and year by 0.4% and
0.8%, respectively. According to preliminary data, arrivals to North America and West
Asia increased by 800 tb/d and 320 tb/d, respectively, from the previous month, while
arrivals to the Far East and Europe declined by 4% each from the previous month.
Spot freight rates
Softer sentiment continued in July for the VLCC class; rates dropped overall from the
previous month, following a generally weak trend. VLCC spot freight rates experienced
a gradual decline from the beginning of the month, with an over-populated tonnage list
often providing charterers with plenty of vessels to choose from. In general, the market
was quiet in July despite a high number of fixtures for Middle East loading. These were
not sufficient to alleviate tonnage availability issues supported by new tonnage entries
into the market. Tonnage build up resulted in a drop in freight rates, which were
occasionally reported to be at their lowest levels this year so far.
Similarly, Atlantic fixtures were slow, leading to a weak market in West Africa. As a
result, VLCC spot freight rates for tankers operating on the West Africa-to-East route
dropped in July from a month earlier to average WS 49 points, down by WS 9 points or
15% from the previous month.
VLCC spot freight rates on the Middle East-to-East long-haul route declined as well
in July, to average WS 43 points, down by 20% from the previous month. Annually,
freight rates for VLCCs on both routes were down, by 41% and 30% from the previous
year. Against expectations, spot freight rates for eastern destinations dropped, as
delays in Chinese ports eased, while supply tightened as typhoon hits did not
materialize, providing no support to freight rates.
VLCC spot freight rates on the Middle East-to-West long-haul route were no
exception in July; they dropped by 18% from one month before to average WS 26
In a pattern similar to VLCCs, Suezmax spot freight rates also developed negatively in
July. Suezmax average rates dropped by 18% compared with the previous month. The
biggest rate drop was seen for Suezmax vessels operating in the West. Chartering
activities on the Africa-to-US route dropped by 23%, as they eased at the beginning of
the month. Tonnage build-up in July prevented freight rates from moving forward, even
during relatively higher tonnage demand days.
Spot freight rates registered for tankers on the Northwest Europe(NWE)-to-US routes
decreased by 12%. Slow tonnage demand, combined with fierce competition, pushed
rates to the lowest level registered since the beginning of the year.
Aframax spot freight rates experienced a drop across all reported routes in July from
one month earlier of 20%, the greatest decline compared with dirty tankers in other
classes. Lower freight rates were reported in various areas; in the Mediterranean and
Black Sea they dropped despite a busy market and stable fixing activities seen earlier
Rates in the Mediterranean dropped significantly, to the lowest level seen for some
time, as a result of reduced delays and smooth operations which supported tonnage
supply in that area. Spot freight rates for Mediterranean-to-Mediterranean and
Mediterranean-to-Northwest Europe routes declined by 26% and 28%, respectively, to
stand at WS 82 points and WS 76 points.
The Caribbean’s Aframax charter market was quiet, with insufficient activity to prevent
freight rates from dropping, despite a rush of inquiries which arrived at the end of the
previous month, providing temporary support, though unable to provide a full recovery.
Thus, Caribbean-to-US rates dropped by 15% from the previous month to average
WS 79 points.
Aframax freight rates in the East were no exception. They dropped on the Indonesiato-the-East
route by 8% to average WS 89 points.
Clean spot freight rates
In the clean tanker sector, average spot freight rates dropped as freight rates edged
down on most reported routes from a month before.
In East of Suez, long-range (LR) freight rates flattened at the beginning of July,
following higher rates achieved at the end of June. Spot freight rates remained
depressed for LR tankers loading naphtha to Japan.
Freight rates for MR vessels in the East remained primarily unchanged before
improving at end of the month, with higher vessel demand led by steady fixing. Thus,
freight rates for tankers operating on the Middle East-to-East route increased by 6% to
average WS 101 points, showing the only positive average gain in July. Rates for the
Singapore-to-East route did not follow, dropping by 4% in July compared with the
In West of Suez, LR vessels saw a steady flow of activity, mainly at the beginning of
the month, though constant tonnage availability prevented rates from achieving any
gainful changes. On the contrary, spot freight rates dropped in West of Suez as activity
levels were depressed, while the position list grew.
Freight rates for MR tankers in the Atlantic were often softer, despite their occasional
rise. On average, freight rates for tankers trading on the Northwest Europe-to-US East
Coast route dropped by 4% to average WS 96 points. Freight rates seen on the
Mediterranean-to-Mediterranean and Mediterranean-to-NWE routes went down by 9%
and 8% to average WS 121 points and WS 131 points, respectively.