Tanker markets hold steady at a strong level as market fundamentals remain positive

A recent financial times article focused on the booming tanker market as spot rates are historically high, driven by growing ton-miles, constrained vessel supply conditions, and growing global crude supply.

The sustained market conditions and vessel supply tightness have driven second-hand tanker prices 50% higher since Q4 2020. The supply tightness is amplified by an aging global fleet averaging 13 years old, which could rise to 15 years by 2026 assuming no elevated scrapping – the oldest since at least the mid-1990s. Lead times for newbuilds have stretched to 3+ years, well above the typical 2 years. Tonnage is being further tied up by environmental regulations requiring slower speeds and locking up supply through longer journey times.

“The ageing tanker fleet to apply supply pressure on tankers in years to come”

The looming vessel supply shortage is not being reflected in the orderbook which remains historically low, as strong demand for vessels from other segments keeps yard capacity constrained. Major tanker stocks like Frontline and DHT are up over 30% year-to-date as earnings conditions remain strong and tanker owners are making the highest profits since the late 2000s.

Additionally, Houthi attacks on vessels in the Red Sea keep diverting vessels around the Cape of Good Hope adding significant ton-miles to the industry. Last week the Houthis launched a fresh attack on a Panama-flagged tanker en-route to China, temporarily disabling the vessel; a sign there is no end to the disruptions in sight.