Product tanker rates rallied last week and more potential is on the way as ships divert away from the Red Sea.
Rates jumped 20% for LR2s, hitting $73,000 per day, while MRs rose 29% to $40,000 per day and LR1s hit $61,000 per day, Clarksons said.
All three asset classes together reached utilisation rates of 92.5%.
“This uptick is partly due to rerouting ships around Africa, leading to reduced availability for spot cargoes,” said analyst Frode Morkedal.
“We have previously estimated a 12% potential increase in product tanker tonne-miles if all tankers rerouted via Africa.”
He said utilisation rose 2.5 percentage points and suggests that roughly 20% of the global product tanker fleet could be engaged in long-haul trades around the Cape of Good Hope.
“Should capacity utilisation reach 95%, LR2 and MR spot earnings could potentially rise to $93,000/day and $50,000/day, respectively,” Morkedal said.
He said refinery output is expected to jump in China, Kuwait, Saudi Arabia and Oman, while European inventories are at a 20-month low and middle distillates below the five-year average, all good signs for the sector.
Product tankers are expected to feel greater effects from the Red Sea security situation than crude tankers — which are expected to benefit from increasing crude production despite recent dips in rates.
The sector already experienced a 5% rise in demand after Russia invaded Ukraine in February 2022.
Shipping began pulling out of the Red Sea in December after weeks of attacks on vessels from Houthi militants in Yemen.
The Houthis first focused on ships with direct ties to Israel but later expanded their target list to any vessel they deemed to have too close links to the country.
