Frontline posts record LR2 rates, expects tanker market upturn

Frontline chief executive Lars Barstad said, “Frontline’s fleet of LR2 tankers took centre stage in Q2 2022, during which period we achieved the highest quarterly TCE we have recorded on this vessel class. Sanctions on Russian oil and other products disrupted trade lanes for refined products globally, causing both refinery margins and freight rates to rise. Crude oil transport has also been affected, and Suezmax tankers have seen increased utilisation and freight rates throughout the second quarter.”

Mr Barstad believes the results point to a “cylical upturn for tankers” adding, “Supply and demand for oil and product transport has gradually been tightening as the world recovers from the Covid-19 pandemic, and a pivotal point seems to have been found. With the lowest orderbook as a percentage of the fleet seen in decades, and oil supply and demand normalising, we believe this bodes well for the years to come.”

Frontline took delivery of VLCCs Front Alta and Front Tweed from Hyundai Heavy Industries in April and June 2022, respectively.

In April and July, it entered into two senior secured term loan facilities for up to US$356M to refinance two existing term loan facilities maturing in Q1 2023.

Most significantly, Frontline and Euronav have announced a stock to create a leading oil tanker operator which on a combined basis would own and operate 68 VLCCs, 56 Suezmax tankers, and 20 LR2/Aframax tankers.

For Q3 2022, Frontiline said it estimates spot TCE on a load-to-discharge basis of US$28,100 contracted for 73% of vessel days for VLCCs, US$45,000 contracted for 73% of vessel days for Suezmax tankers and US$46,200 contracted for 62% of vessel days for LR2 tankers.

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