Spot aframax earnings have risen to their highest since last June on tight tonnage supply amid buoyant intra-European trades.
The Baltic Exchange assessed average aframax earnings at $15,146 per day on Monday, nearly doubling from $8,378 per day on 8 March and outperforming larger tankers.
Market sources said shipowners managed to hike freight rates more than gains in bunker prices this month, despite easing delays in northern Europe and at the Turkish Straits.
“Aframaxes had a great little rally,” one of the sources said. “Owners were realising they had to stem much expensive bunkers.”
There were reports of stable or higher crude exports from the North Sea, Libya and Russia’s Black Sea and Baltic Sea ports as oil prices returned to the pre-pandemic levels.
Russia, the world’s second-largest crude exporter, has won a concession from its allies in the Opec+ group to increase production marginally this year.
Norwegian crude exports are also growing, with the giant Johan Sverdrup field’s production expected to reach 535,000 barrels per day by the middle of this year.
“Rate levels have held up so far in March ... helped by a higher loading programme for Russian exports from Baltic and Black Sea ports,” brokerage Simpson Spence Young said in a research note.
“Johan Sverdrup exports are planned at a new high for April, which could provide further support moving through March.”
With Asian refineries entering the maintenance season, most of the supplies are expected to remain in intra-European trades, where aframaxes act as the workhorses of seaborne crude shipping.
Arbitrage economies for sending European barrels to Asia has been weak in recent weeks, with their benchmark — Brent crude — enjoying a premium to Dubai grade despite the Opec+ cut.
As of early Monday, Platts estimated the May Brent-Dubai Exchange of Futures for Swap at a high level of $2.93 per barrel, suggesting investors were still bidding up Brent futures.
Uncertain outlook
But there are questions over whether the European market strength can last, with the demand picture weakening amid a third wave of Covid-19 infections in some countries.
“European demand is struggling ... The vaccine roll-outs have been slower than expected,” an analyst said.
Moreover, oil firms could start to combine aframax cargoes for larger tanker shipments whenever possible to save freight costs.
The Baltic Exchange has estimated average spot suezmax earnings between $6,000 and $8,000 per day since early March. Average VLCC earnings were assessed at -$11,463 per day on Monday.
“As rates firm in the aframax market, charterers may begin to look to suezmaxes to cover natural aframax stems,” Clarksons Research said.
