Belgium’s Euronav is ready for the next phase of the tanker cycle after rejuvenating its fleet and cutting the first-quarter loss.

The New York and Brussels-listed VLCC and suezmax specialist has sold a series of older vessels in recent months, while adding two modern VLCCs.

The disposals added $13.5m to the bottom line, meaning the net loss to 31 March was reduced to $43.4m, against $71m in the same period of 2021.

Revenue grew to $114.3m from $108.8m. Ebitda of $20m was below consensus.

The tanker division lost $53.5m, down from $77.3m the year before, while the floating storage and offloading vessel operation produced a profit of $10.1m.

VLCC spot rates in the quarter averaged $48,300 per day, up from $39,500 in 2021, and $15,500 for the suezmaxes, an improvement from $11,500.

So far in the second quarter, Euronav has fixed 43% of VLCC days at $14,000 per day, with suezmaxes on $19,700 for 44% of fleet days.

Chief executive Hugo De Stoop said the conflict in Ukraine has driven considerable dislocation in tanker market freight patterns as sanctions and “so-called self-sanctioning” by market participants increase tonne-miles.

“The uplift to freight rates continues to have momentum as oil supplies have increased, driven by higher prices, Opec+ production rising and strategic reserve releases,” he added.

Medium-term fundamentals remain “constructive”, the CEO said, with the orderbook ratio at a 24-year low and no new VLCC orders placed for nine months.

These are being augmented by factors such as US crude exports hitting four-year highs and evidence that surplus tonnage in key markets like the Middle East is reducing, De Stoop added.

Vote approaches

“Euronav has been very active in positioning itself for the next stage of the cycle with a programme of fleet rejuvenation, a detailed outline of our decarbonisation pathway, and of course via further sector consolidation since quarter-end with our proposed combination with Frontline,” he said.

Shareholders will decide on the make-up of the board at a meeting on 19 May in a vote that will effectively decide whether Euronav combines with John Fredriksen’s Frontline or with CMB.Tech, the clean shipping operation owned by Euronav’s biggest shareholder, the Saverys family.

“On a practical level, the global economy will still require crude oil for many years to come as the global energy transition advances,” Euronav said.

“The proposed combination with Frontline will facilitate the emergence of a sustainable custodian in this process,” the shipowner added.

Looking ahead, Euronav called Russia’s invasion a “tragic catalyst” that has boosted aframax and suezmax markets, but also indirectly VLCCs.

Changing patterns

Russian crude is heading to new markets in Asia instead of Europe, which is stepping up imports from the US, Brazil and West Africa.

US crude exports have already increased by 1m barrels per day (bpd) since January and the first VLCC cargo for two years between Abu Dhabi and Europe set sail in April, the company said.

Headwinds remain, however, with downgrades to the International Energy Agency’s (IEA) crude demand growth prediction for 2022.

Demand will still increase but the forecast has been cut by 250,000 bpd to 1.9m bpd.

“Recapturing higher and sustained freight rates will depend on oil supply, consumption, and inventory restocking that key commentators such as the IEA are forecasting for later this 2022,” Euronav concluded.