This week’s chart highlights the rising trend in monthly crude oil shipments from the Arabian Gulf to China, starting in August.
The last week of September is concluding with an upward trend in VLCC rates on the Arabian Gulf-China route, signalling a strengthening market as we approach the winter season, a period traditionally marked by increased energy demand. The momentum currently observed could extend into the coming months, especially as demand for oil typically rises during the colder months to meet heating and industrial needs. This seasonal factor, combined with a tightening vessel supply, may push freight rates higher.
One of the key drivers behind this upward movement is the increased monthly volume of crude oil shipments from the Arabian Gulf to China, which has been rising steadily since August. As China continues to boost its energy reserves and refineries ramp up their operations, demand for large crude carriers (VLCCs) is expected to remain robust. The sustained demand from the world's largest crude importer, China, will likely support continued upward pressure on rates. Another crucial element to watch is the gradual absorption of vessel supply. In recent weeks, there have been signs of improvement in vessel utilisation, with the number of available ships beginning to drop below the annual average. This tightening supply-demand balance is expected to further bolster freight rates as fewer ships are available to meet the rising demand. As we move closer to the winter season, the interplay between these factors—seasonal demand, higher shipment volumes from the Arabian Gulf, and tightening vessel availability—will likely shape the trajectory of the VLCC market. Market participants should keep a close eye on how these dynamics evolve, as the potential for a firm freight market heading into the fourth quarter appears increasingly strong. Meanwhile in the oil market, oil prices tumbled by over 3% on Thursday following a media report suggesting that Saudi Arabia, the world's largest crude exporter, is preparing to abandon its price target in anticipation of boosting production. Additionally, OPEC+ appeared poised to raise output in December. Brent crude futures had dropped $2.26, or 3.1%, to $71.20 per barrel, while U.S. West Texas Intermediate crude fell by $2.31, or 3.3%, to $67.38 per barrel. According to a report from the Financial Times, citing sources familiar with the situation, Saudi Arabia is getting ready to move away from its informal target of $100 per barrel as it gears up for increased production.
For more information on this week's freight supply and demand trends, see the analysis sections below. You can also log in to our Newsroom page under Insights & News to stay updated with the latest reports.
Sentiment in the dirty freight market remained strong in the last days of September, with current levels fueling optimism for a stronger VLCC fourth quarter.
The VLCC MEG-China freight rates rose to 57 WS, a monthly increase of 10%, and up 12% compared to the same week last September.
Suezmax freight rates for shipments from West Africa to continental Europeremained steady at 76 WS, reflecting a 9% annual increase. On the Suezmax Baltic-Mediterranean route, rates held almost similar momentum of the previous week, reaching 85 WS, a 17% increase year-over-year.
Aframax Mediterranean freight rates despite the softening trend of this week held levels above WS100, reflecting a 10% decrease compared to the same week a month ago
‘Product’ WSLR2 Firmer
LR2 AG freight rates are approximately WS145, marking a 12% increase from the previous week and a 16% rise compared to the same week last year.
LR1 Steady
Panamax Carib-to-USG rates, which had previously maintained levels around WS148, have recently begun to decline, dropping below WS140. It remains uncertain whether this downward trend will persist into early October.
‘Clean’ MR Weaker
MR1 rates for shipments from the Baltic to the continent began the week with firm momentum, approaching WS230. However, by the week's end, they had decreased to around WS210. Meanwhile, MR2 rates for shipments from the Continent to the USAC fell WS105, indicating a 43% annual decrease. On the USG-Continent route, MR2 rates fell to WS120, reflecting a 25% monthly decrease.
SECTION 2/ SUPPLY
‘Dirty’ (# vessels) - Decreasing
The supply of crude tankers declined during the last days of September on the VLCC AG and Aframax Mediterranean routes, while a slight upward trend is seen in the Suezmax Wafrican route.
VLCC Ras Tanura: The number of ships dropped below 70, now hovering below the annual average nearing the end of the month.
Suezmax Wafr: The current ship count stands at 66, confirming an increase of more than 10 since the end of week 31.
Aframax Med: The number of ships dropped to 3, representing nearly a more than 50% decrease compared to three weeks ago.
Aframax Baltic: There has been a downward trend since the end of week 31, with current levels at around 24, 9 below the annual average.
'Clean' LR2 (#vessels) - Increasing
MR (#vessels) - Increasing
Clean LR2 AG Jubail: The downward trend observed in the third week of September has begun to shift toward an upward trajectory, with expectations of surpassing the annual average. Furthermore, indicators suggest that the end of the month may bring another increase.
Clean MR: At Algeria's Skikda port, vessel numbers surged to 40, reflecting an increase of 10 compared to the total recorded two weeks ago. Meanwhile, in Amsterdam, MR2 activity remained robust, with 50 vessels, approximately 20 more than six weeks prior.
SECTION 3/ DEMAND (Tonne Days)
‘Dirty’ Decreasing
Dirty tonne days: The decrease in VLCC tonne-days growth has persisted through the first half of September extending the weakening trend for the second half of the month, and strengthening uncertainties about the recovery for dirty freight rates in the fourth quarter of the year with the winter season. Similarly, Suezmax tonne-days growth continued on a downward trajectory, whereas signs for a higher growth of tonne days emerged in the Aframax segment lately, but still recent estimates are below the annual trend.
‘Clean’ Mixed
Panamax tonne days: The growth rate has been revised slightly upward after experiencing a sharp decline in week 37.
MR tonne-days: The growth rate for both MR1 and MR2 vessel sizes has continued to decline, remaining below the annual average and at the lowest weekly percentage growth recorded this year.
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