Wednesday, February 1, 2023
HomeHeadlinesTanker freight rates could double in 2023: Euronav official


To our FREE newsletter
Get all the latest maritime news delivered straight to your inbox.

Tanker freight rates could double in 2023: Euronav official

Inflation and increasing distances to transport oil arising from sanctions on Russian barrels could contribute to a doubling of freight costs in 2023, Rustin Edwards, head of fuel procurement at tanker firm Euronav NV, said at an industry event Jan. 11.

Time charter equivalent rates are currently at around $33,000/day in freight forward markets, having surged since the second quarter, and could double in 2023, Edwards said during a panel discussion at the 13th Global UAE Forum.

Platts, part of S&P Global Commodity insights, assessed Clean Arab Gulf-UK Continent 75,000 lumpsum freight at $5,000 Jan. 11, down from $6,600 Nov. 29, but up from $2,000 Jan. 11, 2022, and up from an average of $4,378/mt in the second quarter.

Much depends on a looming EU ban on Russian oil product imports and accompanying price cap. “It comes down to how the clean [oil product] embargo is enacted and how the clean freight is redirected,” Edwards said.

The EU prohibited imports of Russian crude oil as of Dec. 5 and will prohibit Russian oil product imports from Feb. 5, unless barrels comply with a G7 price cap. This is part of a raft of international sanctions in response to Moscow’s war in Ukraine.

This means Europe must source products such as diesel, jet fuel and naphtha from further afield while Russia must also seek further flung markets to send its products. There has traditionally been a substantial shorthaul flow in products from Russia to Europe.

Higher ton-miles mean less available tonnage. “You might see some transition from dirty large tonnage to clean large tonnage,” Edwards said, citing Suezmaxes carrying distillates rather than crude.

Dirty tanker rates have also risen. Platts assessed dirty West Africa-UK Continent 130,000 freight at $19.34/mt Jan. 10, down from $34.52/mt Nov. 23 — the highest since the coronavirus-induced floating storage bonanza in March 2020 — and up strongly from $9.01/mt at the start of January 2022.

Different tiers in market

A number of tanker companies have avoided doing business with Russian counterparties to avoid infringing sanctions and to guard against reputational risk. This has left a so-called shadow fleet carrying Russian barrels of crude — the EU ban on carrying products has not yet taken effect.

It is too simplistic to talk about a two-tier market, Ami Daniel, CEO and co-founder of Ai company Windward.

A “white” fleet will avoid doing business with Russian counterparties, a “black” fleet will carry Russian barrels and consequently find itself excluded from London insurance providers, and a “grey” fleet will carry Russian barrels under the terms of a G7 price cap, perfectly legally, Daniel said.

The G7 announced a price cap of $60/b on Russian crude, to take effect alongside the EU’s import ban, which allows carriers to transport Russian barrels and still use marine services such as insurance in mainstream international markets.

The level of levels of price capping for products has yet to be agreed upon.

Upside potential for suezmaxes

Suezmax growth was relatively subdued compared with Aframax and VLCC growth in 2022, but 2023 presents “a lot of upside” for Suezmaxes, Matthew Wright, senior freight analyst at ship tracking data company Kpler said.

The US to Europe route is especially promising, he said.

Besides this, considerable uncertainty remains over product tanker routes, with the Feb. 5 ban and what that means for trade flows less than a month away, Wright said.

While Russia could send its products to Latin America or Africa, much longer voyages than to Europe, that is for now speculation and so question marks hang over whether Russia will be able to maintain its diesel exports, for which Europe was always a key customer.

Source: Platts

Related Posts


Finance & Economy
Shipping News

Wartsila: A challenging year with strong annual growth

HIGHLIGHTS FROM OCTOBER–DECEMBER 2022 Order intake decreased by 24% to EUR 1,638 million (2,150)Service order intake increased by 6% to EUR 791 million (747)Net sales...

Hapag-Lloyd achieves extraordinarily strong result in its anniversary year 2022

On the basis of preliminary and unaudited figures, Hapag-Lloyd has concluded the 2022 financial year – in which it celebrated its 175th anniversary –...

Bahri sees profits soar in 2022

Saudi Arabia’s Bahri has seen its profits soar by over 400% in 2022 following a boom in tanker rates, boosting the shipping giant’s oil...

Euronav Files Second Arbitration Against Frontline

Euronav NV hereby informs its shareholders that on 28 January 2023 it has filed an application request for arbitration on the merits in relation...

Oaktree looking at block sale of existing shares in Hafnia Limited

OCM Luxembourg Chemical Tankers S.à r.l. which is ultimately controlled by funds managed by Oaktree Capital Management L.P. (the "Seller") has retained Fearnley Securities,...

Baltic index logs worst month in 3 years

The Baltic Exchange’s main sea freight index registered its biggest monthly percentage fall in...

Baltic index snaps 9-day losing streak as panamax, supramax rates rise

The Baltic Exchange’s main sea freight index snapped its nine-session losing streak on Tuesday,...

Cyprus shipping making waves – report

Cyprus shipping, the steady driver of the economy, is sailing for better times, having...

Baltic index hits fresh multi-year lows on capesize dip

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk...

Baltic index falls for seventh session on lower capesize demand

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk...

Port of Long Beach Closes 2022 with Second-Busiest Year

The Port of Long Beach marked its second-busiest year on record by moving 9.13 million twenty-foot equivalent units in 2022, allowing for a return...

Hapag-Lloyd AG acquires share in J M Baxi Ports & Logistics Limited

Hapag-Lloyd AG signed a binding agreement today under which it will acquire 35% of J M Baxi Ports & Logistics Limited (JMBPL) from a...

Nigeria opens ‘game changer’ billion-dollar deep seaport

Nigeria opened a billion-dollar Chinese-built deep seaport in Lagos on Monday, which is expected to ease congestion at the country’s ports and help it...

SC Ports handles nearly 3 million TEUs in record 2022

South Carolina Ports had a record 2022 with the most containers ever handled at the Port of Charleston. SC Ports moved nearly 2.8 million TEUs...

January oil loadings from Russia’s Baltic ports set to jump 50% vs Dec

Urals and KEBCO crude oil loadings from Russia’s Baltic ports of Primorsk and Ust-Luga in January are set to rise by 50% from December...