Week 48 | 2nd December 2022

The Clock is Ticking

Weekly Tanker Market Report
In just a couple of days from now, the EU ban on imports of Russian crude will come into effect.
Still, huge uncertainty remains about the impact of sanctions and the price cap itself. The cap is
designed to give additional bargaining power to buyers in third countries with minimal disruptions
to crude flows. However, Russia has repeatedly stated (prior to the announced cap of $60/bbl) that
it will not sell its crude under these conditions and is reportedly seeking to boost the recognition of
Russian maritime cargo insurance. As such, the next few weeks will be critical, revealing how strong
Russian determination not to sell its barrels under an arguably reasonable price cap level is, the
appetite for Russian crude in third countries as well as the potential capacity of the tanker fleet
willing to service price capped and/or non-price-capped exports of Russian barrels.

What will happen on the crude side, will offer an indication of what is likely to happen when the
EU ban on imports of Russian clean and dirty products comes into effect on 5th of February. Yet,
whilst there are many similarities between the crude and product markets, there are also some
differences. Russian crude exports to the UK and EU countries in Northwest Europe (which in the
past, accounted for the vast majority of Russian trade to Europe) have been in steady decline since
spring, falling to just 120 kbd in November from 1.27 mbd in January/February 2022. In contrast,
Russian clean exports to the UK/EU show a considerably slower rate of decline, with the trade
averaging 0.77 mbd in October versus 1.2 mbd during the 1st two months of this year. Furthermore,
exports actually increased to 1 mbd in November, which suggests that Russia could be maximizing
product exports until the February deadline.

Russian CPP exports in the West (kbd) Source: Kpler

Furthermore, no major reshuffle
1,800
in Russian CPP export flows has
1,600
been seen so far to date. There
1,400 have been some increases in
1,200 shipments to the Middle East,
1,000 West Africa and Latin America;
800 however, these gains have been
600 fairly limited, although trading of
400 Russian products via storage
200 terminals in Northwest Europe
- has also seen an increase.
2021 Q1 22 Q2 22 Q3 22 Oct-22 Nov-22

NW Europe BS/Med Europe Turkey Africa Potentially, Russia could find it

Latin America ME Gulf Other Asia more difficult to find the same
level of demand in third
countries as it has found this year for its crude. After all, oil demand in likely markets where Russia
can place its products is considerably lower than consumption in advanced western economies. If
that’s the case, Russia could be forced to compensate by increasing crude exports and/or to reduce
its refining runs.

Without doubt, however, the product tanker market is likely to see further increases in tonne miles.
The CPP trade into Europe from further afield has already increased substantially in 2022, most
notably from the Middle East, India and Far East, supported by Russian sanctions, the regional
rebound in demand during the 1st half of the year from Covid related restrictions and the closure
of refining capacity in 2020/21. When the time comes for Europe to fully wean itself off Russian
products, the latest trends in global product flows can only accelerate.

Weekly Tanker Report | The Clock is Ticking Page 01

 Crude Oil
Middle East
The VLCC market continued its rapid are still willing to commit to the longer
decline as a burgeoning tonnage list gave voyage from the Med into China; those
Charterers every encouragement to push that are will be looking for $8.5+ million.
rates downwards and today we are The influence of other size groups in this
looking at 270,000 x ws 77.5 for East and region will continue to be the driving
280,000 x ws 59 to the US Gulf. Rates in force behind this region, so we need to
the AG for Suezmaxes have softened on keep a close eye on surrounding sectors.
limited enquiry in the region over this
week and rates stand at approximately US Gulf/Latin America
130,000mt x ws 97.5 for Basrah/Med A disappointing week for VLCC Owners
and 130,000mt x 195 ws for AG/East on in USG as many ships were released and
natural dates. there has been little activity from
Charterers to swoop up the remaining
West Africa December ships. So, a Charterer today
VLCC rates in West Africa are also could expect to charter in at around
moving downwards after an inactive $11.5/11.75million for a Far East
week, which eroded Owners’ confidence. discharge off early January, edging
Owners no longer have the attractive towards the $11million for 10/15
option of a buoyant USG market as an January. A new floor has been found for
alternative, so the market is currently Aframaxes but with the European market
looking like 260,000 at ws 80 for a long looking solid, it looks unlikely to tumble
East run. Rates in West Africa for much more.
Suezmaxes have softened this week but
now trading in the region of 130,000mt x Crude Tanker Spot Rates
ws 190 for WAF/UKCM on natural dates. WS
We still aren't seeing many cargoes 350
Mid East/China 270kt
heading East but those Charterers 325
WA/UKC 130kt
300
looking to fix the voyage should expect to 275
UKC/UKC 80kt
pay some 5 points more than TD20. 250
However, early trading next week will be 225
200
indicative on how this region will fare as 175
we expect some to reach out and start to 150
125
cover the up-and-coming Holiday period. 100
75
Mediterranean 50
25
The Med has continued to firm, with a 0
flurry of cargoes hitting the market Oct 22 Nov 22 Dec 22

loading from CPC. Owners remain bullish

*All rates displayed in graphs in terms of WS100 at the
and will be looking to fix somewhere in time
the region 135,000mt x ws 277.5 for
CPC/UKCM. Owners are looking to keep
their ships West, but the odd one or two

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 Clean Products
East
It was another strong week for the LR2s, Further westbound enquiry is expected
which remain incredibly tight until the next week as traders look for some
20th December and only last minute further flex on distillate stems.
requirements, or late runners would Mediterranean
cause a Charterer to look to cover in this Overall, it’s been a stable week in this
tight window. West runs saw some big Med handy market which has seen
rates done this week and given the list;
steady levels of enquiry throughout. This
we assess that the $6.25m level is where combined with a fairly tight front end has
the next West bound run should be rated. seen X-Med rates bounce between the
It was not as busy this week on Naphtha 30 x ws 430-435 levels all week. Black
TC1 stems and expect to see more Sea activity has been subdued most of
enquiry coming into next week, however the week with levels still very much load
for now 75 x ws 320 levels is where the
& entity dependent with a wide range of
market should be. numbers being paid. As we near the
It was a busy week for the LR1s with both weekend little remains outstanding, and
on and off market fixing adding fuel to the list is starting to look a touch healthier
the fire. The classic shipping standoff on so come Monday morning we may see
the West runs finally came to an end with Charterers begin to apply some pressure.
$4.7million going on subs and very All in all, it was a positive week for the
quickly followed by a $4.8million (TA diff MR’s here in the Mediterranean as we
is +9/1.0/1.1m) however, the remaining see rates firm off the back of improved
West stems are still yet to be covered and enquiry and a tightening list. We began
those with stems to cover will be hoping the week with Med/TA trading at the 37
a few ships come open on the weekend! x ws 380 mark but with the front end
TC5 ticked along, however, as we growing tight rates have improved with
approach the second half of this month’s almost every fixture. At the time of
fixing window, we should be seeing more writing 37 x ws 410 is on subs Med/TA
enquiry and with Owners pushing for 55 with WAF trading at an improved
x ws 325-330 levels, expect Charterers premium of 25 points (37 x ws 435).
to try and cover quietly.
Owners bullish as we approach the end
The MRs remain a firm segment here, of Week 48.
fuelled further by an extremely tight Red
Sea region. However, Med ballasters are
UK Continent
On paper, you could well have been
likely to ease supply going into the next
fooled into thinking that this MR market
window. TC12 is still a good repositioning
in the North could be in for some
cargo and sits at 35 x ws 350 with
negative correction, but with the support
potential for firming further. We edge
of the US market popping post-
closer towards the 35 x ws 480-500
Thanksgiving leaving us with minimal
levels for TC17 having seen a steady
ballasters. Ample deals have been done
climb during the week.
behind closed doors and with some tricky
replacement / ice stems needing

Weekly Tanker Report | The Clock is Ticking Page 03

 covering, this sector has continued to
flourish in the ws 400s. We continue to
peg Ta around 37x ws 405 with the less Clean Product Tanker Spot Rates
popular WAF runs holding around a 15- WS
UKC/USAC 37kt
20 point premium. Charterers continue 550 Singapore/Australia 30kt
Mid East/Japan 55kt
to have to tread a very fine line in order 500
Mid East/Japan 75kt
not to get caught out, especially if non 450

CPP last cargoes are not acceptable. 400

Finally throw in an active Mediterranean 350
market and we find ourselves once again 300
poised for further gains… 250
200
Handies kicked off the week on a quiet
150
front with very little fixing action to
100
report and the weekend break meant the
50
tonnage list has been replenished Oct 22 Nov 22 Dec 22
resulting in a few more options available
to Charterers. X-UKC corrected down to *All rates displayed in graphs in terms of WS100 at the
time.
30 x ws 375-380 levels by the midweek
point but with a few tricker cargoes (ice
and Poland deliveries) to cover in the
latter stage of the week X-UKC bounced
back to 30 x ws 390 as Owners finish on
a bullish note once again. Russian Baltic
business continues to be fixed under the
radar as levels trade around 30 x ws 595-
600 levels. Potential here.

Weekly Tanker Report | The Clock is Ticking Page 04

 Dirty Products
Handy
Panamax
Rates have again notched on a tad this
Levels notching up into the 300’s has put
week on the Continent where FO moves
a statement out into this sector with
have been increasingly frequent,
Charterers fully aware of the difficulties
benefitting Owners' cause in keeping the
they face in not only securing tonnage
supply vs demand balance tight. Yet it
but also where to accurately benchmark
was the Med this week which has drawn
pricing. Here too surrounding sectors
the most critique rightly or
have removed the ceiling set on last done
wrongly. Some dubious claims of fixtures
trades, and with the US trading with large
being concluded have muddied the
positive disparities to the earnings here in
water, and with-it perceived market
Europe, the continual threat of units
benchmarks. This said, there was enough
ballasting away is ever present.
additional momentum out there to
support the jumps in fixing levels.

MR Dirty Product Tanker Spot Rates

WS
As forward booking of MR’s continues, 700
current trends show no signs of abating 650
ARA/USG 55kt

especially when the surrounding handies 600

Black Sea/Med 30kt
Baltic Sea/UKC 30kt
go from strength to strength. As ever, the 550
flexibility for Charterers to increase or 500
decrease stem sizes is not just prudential, 450
but actually more of a condition in 400

navigating the pitfalls of currently 350

300
operating in this sector.
250
200
150
Oct 22 Nov 22 Dec 22

*All rates displayed in graphs in terms of WS100 at the

time.

Weekly Tanker Report | The Clock is Ticking Page 05

 Dirty Tanker Spot Market Developments - Spot Worldscale
wk on wk Dec Nov Last FFA
change 1st 24th Month* Q4
TD3C VLCC AG-China -24 86 110 107 97
TD20 Suezmax WAF-UKC -26 187 213 186 178
TD7 Aframax N.Sea-UKC +8 316 308 214 220

Dirty Tanker Spot Market Developments - $/day tce (a)

wk on wk Dec Nov Last FFA
change 1st 24th Month* Q4
TD3C VLCC AG-China -27750 53,000 80,750 75,000 66,000
TD20 Suezmax WAF-UKC -15000 75,250 90,250 72,500 70,500
TD7 Aframax N.Sea-UKC +4750 156,000 151,250 82,000 86,500

Clean Tanker Spot Market Developments - Spot Worldscale

wk on wk Dec Nov Last FFA
change 1st 24th Month* Q4
TC1 LR2 AG-Japan +2 293 291 186
TC2 MR - west UKC-USAC +25 404 379 275 342
TC5 LR1 AG-Japan +17 323 306 215 255
TC7 MR - east Singapore-EC Aus +21 435 414 322 368

Clean Tanker Spot Market Developments - $/day tce (a)

wk on wk Dec Nov Last FFA
change 1st 24th Month* Q4
TC1 LR2 AG-Japan +500 71,500 71,000 34,500
TC2 MR - west UKC-USAC +4250 52,750 48,500 27,500 41,500
TC5 LR1 AG-Japan +3750 57,250 53,500 30,250 41,000
TC7 MR - east Singapore-EC Aus +3250 53,250 50,000 33,750 42,000
(a) based on round voyage economics at 'market' speed, non eco, non scrubber basis
ClearView Bunker Price (Rotterdam VLSFO) +10 563 553 613
ClearView Bunker Price (Fujairah VLSFO) +61 686 625 671
ClearView Bunker Price (Singapore VLSFO) +6 656 650 684
ClearView Bunker Price (Rotterdam LSMGO) +20 895 875 1000

Weekly Tanker Report | The Clock is Ticking Page 06

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