Not a single VLCC will be delivered next year, supercharging crude tanker rates, says veteran analyst Petter Haugen.
The focus on decarbonisation across the global economy has made it difficult to find money to buy new tankers, the ABG Sundal Collier analyst said in a note published on Thursday.
“One consequence of this is that in the VLCC segment, there is no VLCC scheduled for delivery in 2024, one ship in 2025 and one in 2026,” he said.
“Since 1970, the annual average has been 35 ships delivered every year. Now, the orderbook to fleet ratio is 1.4% for VLCCs and 2.9% for all crude tankers.”
Given similar economic conditions to the past 70 years, Haugen models crude tankers “to make higher profits in 2024/2025 than we have seen ever before”.
“And the willingness to pay for transportation services is high: a $1 per barrel higher cost of delivery implies about $45,000 per day higher time charter equivalent for a VLCC” on the Middle East to China route, he said.
“Or perhaps more relevant; $10 per barrel implies a $450,000 per day higher spot rate.”
The minuscule orderbook comes as US seaborne crude shifts into a net long position, with higher US production growth likely to have a one-to-one effect on US oil exports, he said.
The threat is a deep recession later this year or even higher tensions around Taiwan.
ABG Sundal Collier data shows 13 VLCCs delivered so far this year, plus 11 on order. Last year, 42 VLCCs were delivered and 35 in 2021.
Tanker rates have been volatile in 2023.
The Baltic Exchange’s VLCC TCE assessment hit a high of $77,648 per day on 20 March, before falling to $8,890 per day on 10 May.
On Thursday, the assessment rose $14 to $13,042 per day, barely reversing another downturn.
Record quarter
Suezmax rates spiked several times this year, according to the Baltic Exchange, hitting a year-to-date high of $93,473 per day in January before falling to $62,323 per day on 9 February. Rates rose again to $87,409 per day on 21 March, then fell to $41,714 per day on 2 May.
Rates slipped further on Thursday, falling $3,090 to $49,174 per day.
Despite this, owners have trumpeted record earnings this year.
John Fredriksen-backed Frontline said its first-quarter profit of nearly $200m was its best opening three months since 2008.
Meanwhile, suezmax owner Nordic American Tankers said it had booked 65% of its voyage days for the second quarter at $42,111 per day — which would be only the third time in its history that such rates were achieved for the second quarter.
