VLCC fixtures from the US Gulf Coast hit their lowest level for nine months as rates for the largest crude carriers showed little sign of a surge despite favourable trading conditions, according to brokers.
The 30 VLCC fixtures slated for February are the lowest since May 2023 and below the monthly average of nearly 35 per month in 2023, according to shipbroker Charles R Weber.
The situation from the US Gulf Coast contrasted with a reported abundance of VLCC fixtures from West Africa to China, said London-based shipbroker Braemar. The firm also said that Asian refiners last week had ditched barrels from the Atlantic in favour of competitively priced Middle Eastern barrels.
Long-haul exports from the US Gulf Coast to China underpinned improved fortunes for VLCCs in 2023 but rates have declined since mid-January.
VLCC time charter equivalent rates were $43,000 a day on Monday, up $882 from Friday but down from $53,000 in mid-January, according to the Baltic Exchange.
Rates for the largest crude carriers hit nearly $78,000 in March last year, the highest level for more than three years but have declined since then after Opec+ countries introduced production cuts to maintain prices.
Braemar said the muted earnings came despite the post-Covid pickup, a low tanker orderbook, an elderly fleet and a massive increase in tonne-miles owing to Houthi attacks in the Red Sea and low water levels in the Panama Canal.
“Though far from weak, these rates are hardly reflective of the extraordinary support that the tanker market is receiving from almost every angle right now,” said head of research Henry Curra.
But fresh US-led strikes against Houthi targets in Yemen over the weekend and threatened reprisals against shipping in the Red Sea offer the prospect of further upheaval and longer voyages for tankers, said Fearnley Securities.
While product tankers have been the biggest winners so far, the “longer the situation persists, there’s an increasing chance of spillover, even in the VLCCs”, the investment bank said.
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