A volatile month concludes with high rates, despite a late market decline.
January was characterized by intense activity and significant volatility in the tanker market. Geopolitical events related to new U.S. sanctions targeting ships transporting Iranian and Russian oil above the price cap led to a sharp increase in tanker rates at the beginning of the month. Nearly 400 tankers—about 10% of the global fleet—were added to the sanctions list, with some Indian and Chinese ports refusing these vessels. This reduction in capacity boosted demand for compliant ships, particularly in the large tanker segments. At their peak, rates surged by over 100%, reflecting the immediate impact of these measures.
Two weeks later, the market settled down, with rates declining from their peaks. However, FFA markets remain high, indicating a continued positive outlook for the coming months.
Increase in tanker scrapping activity
In addition to these market developments, there has been a significant increase in scrapping activity in recent weeks. The VLCC Amor, flying the Cameroonian flag, was sold for demolition in India, marking the first VLCC scrapping in over two years. This appears to have started a trend, with three other tankers—Itaugua (300,000 dwt), Enzo (105,000 dwt), and a 1998 product tanker—also set for recycling.
This increase in scrapping could help reduce aging tonnage and provide additional support to the non-sanctioned fleet in the long term.
Source: Arctic shipping, Clarksons Research.