The VLCC market could be on the turn after a September “disaster”, amid increased activity in the Middle East and US Gulf, according to analysts.

In the Middle East, shipbroker Gibson said sentiment is “firmly back with the owners”, while Affinity said VLCC fortunes have begun to turn for the better after a flurry of fixtures shortened the tonnage list.

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Fearnleys on Monday reported VLCC spot rates for the Middle East Gulf to China route reaching $22,600 per day, up 4% on the day and 33% on the month.

Meanwhile, Braemar reported a flurry of time charters last week for around $45,000 to $48,000 for periods of six to nine months.

The mild recovery only takes rates back to levels of mid-August, according to Baltic Exchange data. They were themselves the lowest for a year as rates for the largest crude tankers fell back from highs during a volatile year for the industry, linked in large part to the Russian invasion of Ukraine and subsequent sanctions.

“September’s spot market has been something of a disaster for VLCC owners,” said Maritime Strategies International in its monthly tanker report.

“We expect spot markets to improve in Q4 but remain well below the levels achieved at the end of 2022.”

The downturn is linked to 1m barrel per day production cuts by Saudi Arabia.

VLCCs carry nearly 90% of Saudi Arabia’s seaborne crude exports — nearly one-third of all volumes carried by VLCCs. Russia has also announced cuts, but the trade is dominated by smaller tankers.

While the production cuts have boosted prices, Saudi Arabia said fears for global demand were behind the cuts rather than a need to raise revenues for non-oil investments.

Hazy future

But the trade reshuffling prompted by Russia’s war has “created a haze” and made it difficult to predict the true state of the global oil market, said Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB.

Despite the production cuts, Affinity and Gibson expect VLCC owners to continue to push for improved rates this week.

Fixtures last week included the scrubber-fitted 314,000-dwt C Freedom (2013) on subjects for $40,452 per day for 115 days from the US Gulf to China. The VLCC was chartered by BP with South Korea’s SK Shipping, according to Tankers International.

Major VLCC players, such as Frontline and Euronav, insist that the sector is on track for several years of strong performance thanks to continued strong global demand, a low orderbook and long-term trade changes because of the war.

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