Tanker tariff relief boosts US crude, for now

A drop in tanker rates has improved the price outlook for US crude this month as it signals stronger demand. The relief may not last too long, however, as most tanker market forecasts for the year still call for much higher rates than in 2025.

“Shipping markets are freeing up and rates are plummeting from the US to Asia and from the UK to Asia,” an analyst at financial services provider TP ICAP told Bloomberg this week, adding that the trend was boosting demand for US crude oil.

As a result, local US benchmark prices have recovered, although high sulfur grades remain under pressure following President Trump’s statement that the US will take millions of barrels of Venezuelan crude.

However, the overall freight situation remains inflated. The reason is the increase in supply, both from OPEC+ and the United States, which has restricted the availability of oil tankers. Last year, this situation led to half a dozen new Very Large Crude Carriers making their maiden voyage empty, rather than loaded with gasoline, as is the usual practice. The reason they traveled empty was to pick up shipments of crude oil and collect the increasing daily rates.

Unusual strength at the end of the year has seen tanker rates on key shipping lanes rise 467% so far this year, according to Bloomberg estimates published in December and based on data from the Baltic Exchange and commodities markets data provider Spark Commodities.

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Also last month, Lloyd’s List reported a sudden drop in tanker rates on the Baltic Exchange, with VLCC rates losing 20% ​​between December 19 and 22. However, rates remained “the highest since the end of the floating storage boom in spring 2020,” at $83,882 per day. Freight rates for smaller tankers also remain high, Lloyd’s List notes in its report.

Part of the increase in tanker rates was attributable to US sanctions on Russia’s Rosneft and Lukoil that took effect in late November. Tanker rates increased in anticipation of a reduction in the fleet Russia was using to transport its oil. This week he also provided support for tanker tariffs after the United States chased a Russian-flagged tanker across the ocean and eventually captured it in the North Atlantic. The ship, Bella 1, is under US sanctions. However, its capture by US forces indicates an intensification of geopolitical tensions which, combined with the limited availability of tankers, will likely keep freight rates high.

Meanwhile, supertanker fleet utilization rates are expected to hit a seven-year high in 2026 at 92%, up from 89.5% last year, a Jefferies analyst said in December. The utilization rate refers to the number of tankers rented as a percentage of the total tankers on the market.

Another factor that will increase tanker rates is sanctions. The more tankers the United States imposes, the fewer tankers will be available to transport crude around the world, Reuters noted in a mid-December report. Last month, sanctions and increased demand for OPEC+ tankers pushed freight prices up to $130,000 a day, and although prices have since declined, they remain higher than a year ago. There is also the factor of aging tankers, the report notes, which limits tanker availability and supports higher rates. Oil companies are increasingly abandoning tankers once they reach 15 years as safety requirements become more stringent. About 44% of the world’s tanker fleet is 15 years old or older. Of that 44%, 18% are under sanctions, according to oil major Frontline. With so many factors reducing the availability of tankers, rates, although lower, will likely remain well above year-ago levels unless oil demand declines, which is only likely in the event of a rise in prices.

By Irina Slav for Oilprice.com

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