A sizable gap has persisted between LR2s and LR1s carrying cargoes from the Middle East to the Far East, but the mismatch is not expected to last for much longer.

With an LR2 sailing from the Middle East to Japan earning time charter equivalent (TCE rates) of $27,876 per day and LR1s on the same route earning $35,733 per day, Howe Robinson said it was $200,000 cheaper to fix one of the larger product tankers.

“Good activity so far this week counting 12 ships subs/concluded, subsequently the tonnage list has shortened, and we now count 20 vessels under 15 years in the next 20 days, which is by no means oversupplied,” the broker said of the Middle East-Japan LR1 trade in its daily note published on Wednesday.

Howe Robinson said a similar gap and savings were seen for ships heading from the Middle East Gulf to destinations west.

“While the LR2 tonnage list is oversupplied like this and activity levels remain low and effected by clean-ups, this will subdue potential gains on LR1s,” the UK broking house said.

On a Worldscale basis, the difference between an LR2 and an LR1 on the route has hovered around 90 points over the last week, with an LR1 sailing from the Middle East to Japan as high as 320 on 29 June.

Both routes have since lost 30 points, falling to WS 200 for an LR2 and WS 290 for an LR1.

Overall, product tanker rates continued to weaken.

The Baltic Clean Tanker Index continued a two-week slide on Wednesday, losing 37 points and falling to 1,434.

On 22 June, the index hit a year-to-date high of 1,732, before rates began falling.