"It’s not only that Russian crude export terminals can’t handle larger
tankers. A highly unusual transport pattern for U.S. crude exports has
emerged, creating another war-induced headwind for owners of larger
tonnage. Prior to the war, U.S. crude exports to Europe were loaded aboard
midsize Aframaxes (tankers with capacity of 750,000 barrels) and
Suezmaxes (1 million barrels). U.S. crude exports to Asia were loaded
aboard very large crude carriers (VLCCs; 2 million barrels).
Europe
hiked its crude imports from the U.S. in the wake of the invasion,
replacing seaborne imports from Russia, which have been banned since
Dec. 5.
Much of Europe’s incremental volume from the U.S. has
moved aboard VLCCs, not midsize tankers — a transport model that was
extremely rare before Russia’s invasion of Ukraine.
“Virtually
all the additional [U.S.] sales to Europe were done on VLCCs,” wrote
Erik Broekhuizen, manager of marine research at Poten & Partners, in
a report.
Tanker demand is measured in ton-miles: volume
multiplied by distance. If ships switch to shorter routes, it’s a
negative for demand, and thus, for spot rates.
VLCCs have
“cannibalized” the shorter-haul U.S.-Europe business of Aframaxes and
Suezmaxes. Simultaneously, China has increased imports from Russia,
limiting Chinese demand for longer-haul U.S. exports. Both are negative
for VLCC voyage distance.
“The problem is that more VLCCs are
arriving in the Atlantic than leaving,” said ship brokerage BRS. “The latest data suggests that 108 VLCCs are currently trading
west of Suez and that more are arriving every day, making the Atlantic
crude tanker market more competitive." ZeroHedge
