Chart of the Week: Dirty crude oil flows from OPEC+ oil-producing countries to AsiaThe announcements of OPEC oil productions in January and February appeared to have little impact on the volume of dirty shipments to Asian destinations.​​​​​​


​​​​​In the second week of March, the VLCC MEG-China market rates continued to soften, while the number of vessels in Ras Tanura showed an increase despite the significant downward trend observed earlier in the month. Within the crude tanker segment, the Aframax segment continues to demonstrate improvement in the cross Mediterranean route, with growth in tonne days outpacing other crude tanker vessel categories.

Regarding the flow of crude oil to Asian destinations, it's noteworthy that January and February saw no significant decrease in monthly shipment volumes compared to the previous year's figures. Moreover, there's a slight uptick fueling expectations for a consistent volume of monthly oil shipments from OPEC+ oil-producing countries. However, the latest monthly report from the IEA warns of a potential shift in the oil market from surplus to supply deficit throughout 2024 if OPEC+ extends its production cuts until the end of the year.

For more information on this week's trends, see the analysis sections below:

Freight Market, Supply and Demand

SECTION 1/ FREIGHTMarket Rates (WS) ‘Dirty’ WS Weaker​
VLCC - Suezmax - Aframax
In the second week of March, VLCC AG-China rates displayed a renewed softening trend, despite early indications of a potential spike earlier in the month. Conversely, Aframax Med rates maintained their firmness over the past fortnight, suggesting that the market may have already reached its lowest point.
  • VLCC MEG-China freight rates have once again plummeted to 70WS, with a continuing downward trend indicating potential further declines. It's noteworthy that the last peak was observed nearly five weeks ago.
  • Suezmax freight rates for shipments originating from West Africa to continental Europe still hover of a little above 100WS, indicating a yearly decrease of 10%.In the Suez Baltic Med route, rates have declined to 105WS, marking a significant 36% decrease compared to the previous year.
  • Aframax Med freight rates surged to 175WS, marking a substantial increase of nearly 25 points compared to the previous week. This recent uptick in rates aligns closely with the levels observed a month ago during a comparable week of the month, indicating a consistent sentiment in the market.

‘Product’ WS
LR2 Firmer

  • LR2 AG freight rates have soared to a new peak, reaching 240 WS, representing a staggering increase of almost 55% compared to the levels seen last week. This surge suggests a notable shift in market dynamics, with a firmer momentum anticipated for the second half of March, following a period of persistent decline in previous days.
LR1 Weaker
  • Panamax Carib-to-USG rates dropped below 260WS, 30% weaker than in a comparable week a month ago.

‘Clean’
MR Mixed

  • MR1 rates for shipments from the Baltic continent continued the decline, hovering around 305WS, indicating a decrease of 20 points compared to the previous week. Meanwhile, MR2 rates for shipments from the continent to the USAC remained relatively stable, hovering around the same levels as the previous week, at approximately 200 WS. This indicates a notable 25% decrease compared to the figures recorded a month ago.
SECTION 2/ SUPPLY

'Dirty' (#vessels) Mixed

Despite early March showing indications of a significant decrease in the number of vessels for the VLCC Ras Tanura segment, the latest signs suggest a gradual increase above the annual average. Conversely, the supply trend seems to be decreasing for the Aframax Primosk and Med Novo segments.
  • VLCC Ras Tanura: The ship count has climbed to 60, marking a significant increase of 20 compared to the low recorded in early March. Current levels are trending above the annual average, contributing to a downward trend in the freight market sentiment.
  • Suezmax Wafr: The current ship count stands at 77, slightly below the highs of 80 recorded in early March.
  • Aframax Primorsk: The current number of ships has decreased below the peak of 40 recorded in the previous week but remains 5 vessels higher than the annual average.
  • Aframax Med Novo: The number of vessels has fallen below the annual average of 10, indicating a decrease in activity compared to the levels observed two weeks ago.

'Clean'
LR2 (#vessels) Increasing

MR (#vessels) Decreasing

​​​​​​​​​​​
  • Clean LR2 AG Jubail: The downward trend observed in the previous week continues, with current levels hovering above the annual average of 9.
  • Clean MR: Vessel activity for MR1 Algeria Skikda and MR2 Amsterdam has declined below the annual average, with levels dropping to 20 and 34 respectively. The recent decreases suggest signs of potential improvement in market prices in the second half of the month.

SECTION 3/ DEMAND (Tonne Days)

​​‘Dirty’ Decreasing

  • Dirty tonne days: Throughout the second week of March, a persistent downturn was observed in the growth of tonne days for VLCC and Aframax vessels over the past three weeks. In contrast, there has been a significant increase in tonne days for Suezmax vessels since the conclusion of week 8

‘Clean’ Mixed

  • Panamax tonne days: The second week of March appears to reflect a return to the growth rate observed two weeks ago. However, it remains uncertain whether this rapid pace will persist in the latter half of the month.
  • Clean MR tonne days: The tonne day growth for MR1 and MR2 vessel sizes has been consistently declining since the start of the year, and it appears that this weaker pace will continue for at least another month..