As the crude market struggles to supply stable volumes of crude amid OPEC+ voluntary cuts as well as seasonal declines in Russian crude exports, prices have continued to trend higher.
The supply-side restrictions had kept crude tanker rates low, particularly for VLCCs heading to China. However these are now finding support.
There has been slight demand side support, partly driven by a small pickup in VLCC tonne-days towards Asia out of Saudi Arabia, as m-o-m preliminary exports have shown a sharp increase in September. This could indicate rates have reached a floor for 2023.
However, with crude volumes towards China remaining low due to inventory draws supporting high refinery runs more than crude imports, demand upside for VLCCs is likely to remain capped in the short term.
If rising crude prices prompt a reduction of the current voluntary cuts, this could support VLCCs heading towards the end of the year.
Posted on October 6, 2023 from Vortexa
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