For crude tankers, we forecast that the supply/demand balance will tighten further during both 2024 and 2025. Low fleet growth, along with increasing sailing distances, create the foundation for the improvement despite a slowing of growth in oil demand.
The product tanker supply/demand balance is also expected to tighten in 2024 but weaken in 2025. Like the crude tanker market, longer sailing distances support demand growth despite slowing oil demand. However, an increase in contracting of new ships during 2023 will drive fleet growth in 2025 higher than our estimated demand growth.
The crisis in the Red Sea is driving sailing distances up as ships avoid the Suez Canal and instead proceed via the Cape of Good Hope. In our forecast, we assume that this crisis will impact the market until the end of June 2024.
Crude tanker fleet capacity growth will be mainly in the Aframax and Suezmax segments that are estimated to grow by 2.8% and 4.2% respectively from end 2023 to end 2025. VLCC capacity is expected to grow only 0.5% and benefit most from the tighter supply/demand balance.
We forecast that product tanker fleet capacity will grow 6.2% between end 2023 and end 2025. The fastest growing segments are expected to be LR2s and MRs with capacity growth of 13.9% and 5.3% respectively during the two-year period. The two sectors are also expected to see the fastest demand growth but LR2s may nevertheless suffer more from the weaker market conditions expected in 2025.
Asset prices, rates and earnings have mostly been strong year-to-date and higher than a year ago. We expect rates, earnings and second-hand prices to continue to develop favourably in 2024 in line with the forecasted supply/demand balance. In 2025, some weakening must be expected for product tankers.
Source : BIMCO
