Crude Freight: Past the Peak, But the Floor Should Hold

VLCC rates could further ease from record highs, but inefficiencies, attacks and fleet consolidation should keep them above pre-conflict levels.

VLCC rates in the Atlantic Basin have fallen sharply from record highs. Expected tonnage to discharge is rising, weaker Asian demand for Atlantic barrels and possible sanctions relief, all point to further short-term softening. Persistent Middle East inefficiencies, ongoing attacks and a more consolidated fleet mean rates are unlikely to fall back to pre-conflict levels.

VLCC rates from the US Gulf and West Africa have fallen from historical peaks by 27% and 32% respectively over the past two weeks, with smaller tankers following. Is this a short-term correction, or the start of a deeper decline? And if rates fall further, would they reach pre-war levels?

To answer that, we need to look at the five main drivers of this year’s rally:

This story was originally published by Breakwave Advisors. Read the full story at Breakwave Advisors →