One year on from the start of the war in Ukraine, a lot has changed for the tanker market due to the significant role played by Russia in the global oil market. While Aframax and product tankers saw an immediate, direct, impact from the conflict, VLCC rates lagged behind. However, in 22Q4, VLCC rates were propelled by the reopening of the Chinese economy and a surge in Chinese refinery throughput. After remaining near zero in the first half of 2022, VLCC rates (for conventional tankers) firmed to $34,000 per day in 22Q3 and doubled to $72,000 per day in 22Q4.
As tanker freight markets improved across all segments, secondhand values increased in 22Q4. As seen in the adjacent chart, secondhand tanker values were up at least 30% from a year ago at the closing of 2022, with product tanker and Aframax tanker values increasing at a much faster pace. Values for older tonnage surged in the second half of the year, as interest in vintage tankers increased, possibly to carry sanctioned Russian cargoes.
Looking ahead, the aftereffects of the Russia – Ukraine war continue to dominate the forecast, and more uncertainties will be added into the mix between 2023 and 2027 as decarbonization-related regulatory developments take an increasingly central role. This period will have a long-lasting impact on the tanker market and in more than one way is a watershed period for the industry. The rise of inefficient trade patterns due to the embargo of Russian oil is expected to increase the average trading distance by 5% in 2023, while trade volumes are projected to increase by a similar amount, predominantly driven by recovering Asian oil demand.
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