The current state of the tanker market presents a mix of supportive demand and elevated uncertainty. Recent indicators suggest that demand for crude oil is holding up freight rates. OPEC is leaning towards a significant increase in production, diverging from its previous price control strategy. Meanwhile, the U.S. Energy Information Administration (EIA) anticipates a global demand growth of 1 million barrels per day (mbpd) and projects that crude production may exceed demand for the next couple of years.
These factors have influenced a downward adjustment in price forecasts for both West Texas Intermediate and Brent, underscoring a favorable environment for crude tanker freight rates. However, the market faces potential disruptions due to several “wild cards.” Approximately 22% of the Very Large Crude Carrier (VLCC) fleet is engaged in transporting sanctioned cargoes, which has become increasingly uncertain under heightened regulatory scrutiny. Furthermore, the ongoing energy transition towards alternative fuels may gradually slow per capita crude oil demand, impacting tanker dependency over the long term. On the supply side, the situation appears relatively promising yet complex.
Older tankers are being retired more quickly than new orders are placed, despite anticipated growth in demand. There’s also a growing consideration for propulsion technology, influencing newbuild decisions. The cost of modern dual-fuel VLCCs has risen, making it increasingly challenging to justify speculative orders without long-term charters, which are becoming harder to secure amidst the shift in energy paradigms. Considering these factors, crude tanker asset values are expected to remain stable throughout 2025, despite fluctuations in freight rates and other market dynamics.
The intersection of geopolitical tensions, economic outlooks, and technological changes creates a cautious environment for investment in new tankers.