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Tuesday, November 13, 2018

Developments in the freight market

The graph below shows the 3 marked peaks in the tanker spot freight market, with rates not seen since the early 1970s.

For the last 7 months the tanker freight market has been exceptionally strong. The average timecharter equivalent rate for VLCCs AG-East has been close to USD 80,000 per day in the period from November 2003 up to and including May 2004. For the other trades, as seen in the graph below, the averages have been for suezmaxes USD 52,000/day and for aframaxes USD 43,000/day. For the two clean trades Caribs-US and Cont-US the averages have been USD 22,000/day and USD 20,000/day respectively.

In addition to the fleet supply/demand balance which has been tight anyway, higher oil imports in China and the US, political tensions and port/waterway congestions, and higher Middle East crude oil production have all contributed to the freight market increase as seen in the graph below. For the last 7 months average Middle East crude production was 21.8 mbd as compared to 19.6 mbd in the period October 2001 to October 2002 when the average freight rate for a VLCC AG-East was USD 15,000/day.

Looking at the whole period from October 2002, when the freight market again climbed, to May 2004, the average VLCC rate AG was USD 52,000/day.

T/C equivalent rates for the trades described above are daily updated on our web and can be found on the following link: