The latest developments in the tanker market indicate a significant rise in Canadian crude oil exports to Europe, influenced by new U.S. tariffs that have diminished the competitiveness of Canadian oil in the American market. As a result, exporters are redirecting their focus towards European refiners, who are experiencing tight supply due to instability in their usual sourcing regions.
Notably, the Netherlands and the United Kingdom have absorbed a large portion of these redirected volumes, dominating around 69% of European imports and establishing Northwest Europe as a crucial hub for receiving Canadian crude. This shift is reshaping transatlantic trade routes and effectively impacting the Mediterranean tanker market.
The TD19 route (80K Cross-Mediterranean) has seen a notable surge in rates, increasing from under 150 WS in early March to around 200 WS recently, a rise of over 48 WS points in just a week. The Aframax tankers have particularly benefited from this trend, accounting for approximately 75.8% of these flows due to their flexibility and compatibility with various European ports.
Looking to the future, the ongoing U.S. tariffs and Europe’s quest for reliable crude sources suggest that this trend may continue into the second quarter of 2025. The Mediterranean freight rates are also projected to remain high, especially if Canadian oil volumes continue to replace those from West Africa or the Middle East.
In terms of current market dynamics, Aframax rates have surged 65% month-on-month, highlighting the impacts of these geopolitical trade barriers. Conversely, VLCC rates have dipped, reflecting varying pressures across different tanker segments.
The supply of crude tankers remains below average, though some segments are beginning to recover. Overall, the interplay of these factors is actively reshaping global crude flows and market dynamics well into 2023.