A huge rise in VLCC cargoes helped the sector enjoy a strong recovery in 2022, according to leading pool operator Tankers International.
Drawing on its fixture database, the company said big tankers lifted 41 more spot cargoes per month on average last year than they did in 2021.
This is a staggering 19% increase, massively outstripping the 10-year average of 4% growth per year before the pandemic hit.
The improvement translated into a rise of 7% in employment days for VLCCs, in line with the 10-year average, excluding the two years impacted by Covid.
“Although the VLCC market was slower to recover than the suezmax and aframax markets and remained lacklustre through most of the first half, it has since returned with full force,” Tankers International said.
The company added it had been encouraging to see the market quickly adapting to added trading complexities and changing trade flows arising from the Ukraine war.
“While we may not see the same uptick in absolute fixture numbers this year, tonne-miles are set to continue on an upward trend with more oil moving long-haul. Given that development, we will see demand growth in the VLCC segment remain robust,” the pool player argued.
Significant growth was driven by the Middle East Gulf market, with an extra 35 monthly liftings across the year.
This development ran parallel to Opec+’s commitment to gradually add oil supply back to the market.
“Following the announcement that the alliance would cease gradual additions, we noted a slight drop in cargo numbers from 186 monthly liftings in Q3 to 174 monthly liftings in the fourth quarter,” Tankers International said.
“This level of activity remains much higher than pre-Covid cargo counts of 160 in the fourth quarter of 2019, and it provides a solid baseline of activity for the VLCC market,” the company added.
The second largest trade route in the VLCC market is West to East, comprising all the load regions in the Atlantic basin, excluding West Africa.
Fixture data showed a monthly average of 38 liftings on this route, a slight decline from the previous year.
This relatively low average is down to very muted activity in the second quarter, when there were just 32 liftings per month.
The driving force behind this was mainly at the receiving end, as China experienced a period of significantly reduced crude purchases.
But the country began to emerge from Covid restrictions over the summer months, and in combination with new product export quotas, the market saw renewed crude demand from Chinese refiners.
“This was the real catalyst for the buoyant VLCC market we have today. Not only did Chinese crude demand return, but China was sourcing much of the incremental barrels from the Atlantic basin,” the pool player said.
The company recorded 46 liftings on the West to East trade lane each month in September, October and November.
Another game-changer in 2022 was the resurgence of inter-Atlantic trading on VLCCs.
Europe has been pulling crude oil from new suppliers in the US, Brazil and West Africa, and on some of these routes, it became more economical to employ tankers from the largest segment.
Since May, Tankers International has counted an average of 11 monthly liftings on these routes.
“The pull of VLCCs into Europe both from the Atlantic basin and the AG [Arabian Gulf] has given shipowners the ability to become more creative in the trading of their vessels, devising increasingly complex strategies to maximise the utilisation of their assets,” the company said.
