The upheaval in global trade caused by Russia’s invasion of Ukraine should lead to the best earnings for the tanker market since the start of the Covid-19 pandemic, according to shipbroker Simpson Spence Young (SSY).

The unprecedented shift in trade flows and longer voyages are expected to benefit most segments but “challenges” remain for VLCCs, the broker said in its mid-year outlook report for 2022.

Routes have already shifted with the war reversing the extreme weakness of many tanker segments at the start of the year, said Claire Grierson, SSY’s head of tanker research. Product carriers have most benefitted from the disruption to routes.

Sanctions imposed on Russia have led to European countries seeking alternative supplies from sources such as the US Gulf, Middle East and Latin America.

While the shift has already benefitted suezmax and aframax vessels in the Atlantic, the outlook for VLCCs is less clear, it said.

Crude demand from Asian refiners has increased to tap into high profit margins. But they have moved from Atlantic to Middle East crude suppliers limiting tonne miles available for VLCCs, said Grierson.

VLCCs are instead being used increasingly for less-profitable intra-Atlantic routes. VLCC time charter equivalent rates have risen to -$8,665 per day, their highest since mid-April, according to the Baltic Exchange. They were last in the positive in January 2021.

Despite remaining concerns over inflation, the global economy and Covid-19, the outlook is generally better for the tanker sector, said SSY.

“The replacement supplies for Russian oil are already translating to greater tanker tonne miles for many segments,” according to Grierson.

She added: “The unprecedented shift in trade flows ahead… should create a firmer earnings scenario than the tanker market has experienced since the pandemic began.”