07·01·25 – Crude tanker owners will continue to enjoy attractive earnings in 2025 amid economic and geopolitical uncertainties, as slow fleet growth and increased long-haul trade will keep tonnage utilisation high. While VLCC rates will benefit from a surge in long-haul trade and a stagnant fleet, the mid-size tanker market will soften because of an influx of fresh tonnage.
Increased refinery activity in oil-producing countries will continue to restrain trade
A surge in refinery runs in oil-producing countries in the Middle East and Africa will continue to curb global crude oil trade in 2025. A rise in refinery runs in crude-producing countries in the Middle East and West Africa will continue to cap trade growth in 2025 amid moderate growth in oil demand. Nonetheless, a likely expansion in long-haul trade will translate into higher tonne-mile demand, outpacing the trade.
Trade pattern to favour large crude carriers at the expense of mid-size tankers
With most of the crude production growth coming from the West (Americas) and most of the demand growth from the East (Asian refineries), long-haul trade will increase in 2025 at the expense of short-haul trade. Accordingly, demand for VLCCs will jump, whereas mid-size tankers will lose some sheen.
Although global refinery throughput growth will be stable at 600 kbpd in 2025, a likely rebound in Chinese refinery runs and continued growth in refinery runs in the rest of Asia bodes well for VLCC demand. Improved long-haul crude trade on AG-China and Americas to Asia routes will boost demand for VLCCs. Moreover, increased Canadian crude exports to Asia with high crude flows through the TMX pipeline will also support demand for this segment.
Conversely, a contraction in refinery throughput in Europe and the US will cap the demand for mid-size tankers. European imports of Middle Eastern crude will decline in 2025 as an exportable surplus of the latter will shrink with increased refinery runs. Suezmax demand on AG-Europe will weaken further as stretched voyages via the Cape of Good Hope (CoGH) continue favouring VLCCs. Suezmaxes were the main workhorses on this route before the Red Sea crisis, accounting for 86% of the trade, whereas VLCCs and Aframaxes accounted for 7% each in 2023. However, with the disruption to the Suez Canal traffic and rerouting of trade via CoGH, the share of VLLCs surged to 52% at the expense of Suezmaxes because of the economies of scale. Any decline in West African crude exports to Europe because of the ramp-up in Dangote refinery in Nigeria will further hurt Suezmax demand. Nonetheless, buoyant Transatlantic trade from the Americas to Europe will give some respite to mid-size tankers.
Supply dynamics are also tilted in favour of VLCCs as 30 Suezmaxes (5% of the fleet) are scheduled to be delivered by the end of 2025 compared to just six VLCCs. While an influx of fresh tonnage and a subdued short-haul trade will keep mid-size tanker rates slightly under pressure, tepid growth in fleet and strong long-haul trade will support VLCC rates.
2025 risk scenarios for crude tanker shipping
Source: Drewry Maritime Research
Conclusion
In 2025, rising refinery runs in oil-producing regions will curb crude trade growth, favouring VLCCs over mid-size tankers as long-haul routes expand. Limited fleet growth and higher tonne-mile demand will bolster VLCC rates while rising Suezmax deliveries and lowering short-haul trade curb mid-size tanker earnings. The market will continue to incline to larger vessels.
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