Tanker freight rates and earnings have been so weak Clarkson Research Services’ composite tanker earnings index dipped below a 30-year low – but no longer
The Clarkson Research Services (CRS) tanker earnings index is composed of the estimated earnings of four main tanker sectors: MR, Aframax, Suezmax and VLCC. Between January 2021 and February 2022 the index was 64% below the 30-year average.
Then in February 2022, Russia invaded Ukraine in what President Putin of Russia hoped would be a quick, decisive takeover followed by grudging acceptance by the West of a new status quo, as happened with the 2014 invasion of Crimea.
Instead, the West has reacted far more actively, looking to displace Russian energy from the European portfolio and reshaping the tanker trades.
The war in Ukraine has barely touched VLCC rates, noted CRS, and will not until the oil producers in the Middle East increase oil exports – but earnings have increased by 20% for modern eco scrubber-fitted VLCCs on the back of reduced bunker costs.
The main beneficiaries have been the Suezmax and Aframax tankers, which have enjoyed earnings between March and mid-May 2022 of US$37,000 per day and US$63,000 per day, respectively.
Along with the rise in MR tanker earnings to around US$25,000 per day, the CRS composite tanker earnings index has surpassed US$30,000 per day between March and mid-May 2022.
The outlook for VLCCs remains uncertain but analysts point to the reaction in China when its current lockdown eases. It may choose cheap Russian oil to refill crude oil reserves – a potential boost for the VLCC sector.
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