Asia Pacific tanker market navigates shifting currents

The Asia Pacific tanker market is undergoing a profound transformation as shifting trade policies, fuel security concerns, and decarbonisation pressures reshape regional shipping routes. Tonne-mile demand is fluctuating as nations adjust their crude oil sourcing, regulatory frameworks evolve, and alternative fuels begin to take hold.

The geopolitical landscape has introduced a level of complexity not seen in decades. Sanctions on Russian and Iranian crude have forced refiners in China to adapt, with independent oil terminals at Dalian, Shanghai, Zhoushan, and Huizhou stepping in to handle sanctioned shipments. These facilities, however, are limited in capacity and bring additional freight costs, creating bottlenecks in crude supply chains. This has prompted Chinese refiners to adjust their crude import strategies, reinforcing trade relationships with Russia while employing ship-to-ship transfers in Malaysian waters to keep Iranian crude flowing.

While China remains a dominant crude importer, the broader region is witnessing a recalibration of tonne-mile demand. Japan’s crude oil import requirements have fallen in recent years. This shift reflects the country’s gradual move towards alternative fuels and greater efficiency in energy consumption. South Korea, another major refining hub, has also seen a contraction in its crude shipping demand, albeit at a much smaller scale. In contrast, Singapore has seen tonne-mile demand rise, highlighting the country’s strengthening position as a regional refining and bunkering centre.

“CO2 shipping is emerging as a new prospective market within the tanker sector”

Australia presents a different challenge, grappling with fuel security concerns despite being an oil producer. Much of its crude is exported due to its high quality and low sulphur content, making it more suitable for foreign refineries than the country’s two remaining facilities. Australia’s limited refining capacity leaves it highly dependent on imported fuels, which raises concerns over supply resilience in times of disruption. The situation has prompted Canberra to introduce support measures, including financial incentives for its last two refineries, but the long-term outlook remains uncertain.

Against this backdrop, CO2 shipping is emerging as a new prospective market within the tanker sector. Countries with limited sequestration capacity, such as Japan, South Korea, and Singapore, are looking to transport CO2 to storage hubs in Australia, Malaysia, Indonesia, and Brunei. The challenge, however, lies in the lack of regulatory cohesion across the region. Without clear guidelines on CO2 purity, liability transfer, and monitoring, investment in liquefied CO2 shipping infrastructure remains constrained. Regionally there is a call for governments to react in a clear and rapid manner to establish binding agreements.

The Asia Pacific tanker trade is being redefined by external pressures and domestic policy choices. The region’s largest crude importers are adapting to new geopolitical realities, while refining and storage strategies continue to evolve. As decarbonisation efforts gain momentum, traditional shipping patterns will be further disrupted, creating both challenges and opportunities for the industry.