Frontline has warned that VLCCs carrying sanctioned Iranian and Venezuelan crude are distorting the legitimate tanker market and hitting demand for ships.
The Oslo-listed tanker owner said in its second-quarter results statement that a ship over 20 years of age will struggle to find work with regular charterers.
But many of these older ships are working outside the regulatory framework set by the International Maritime Organization, often operating without insurance and disobeying the common safety regulations the rest of the industry embraces, Frontline added.
"Activities of this sort have regrettably always been a challenge in the shipping industry, but the volume of such activity has previously been negligible," the company said.
But now the illicit trades seem to be taking place on a scale which both severely hurts the demand for freight in the compliant tanker market and distorts the global oil trade, displacing significant volumes of compliant crude, the John Fredriksen company argued.
Euronav also concerned
Euronav chief executive Hugo De Stoop also took aim at the trade on the Belgian tanker owner's conference call earlier in August, saying 50 veteran vessels continue to operate in the clandestine market.
But he said he views this as the peak number of ships that will be involved.
Frontline also said the outlook for the tanker market continues to look constructive.
"The fundamental picture has become even more pronounced as few tankers have been ordered and available newbuilding capacity is scarce for the next three years," the company added.
The shipowner remains optimistic of an improvement in rates, viewing current low earnings as unsustainable.
