Product Tanker Market Adapting to New Realities
The product tanker market has been adapting to the new market reality following the war in Iran. According to shipbroker Gibson, clean exports in the East have been averaging the lowest levels in over a decade, while West of Suez clean exports are near record monthly highs.
MR Market Resilience
The MR market has proven to be resilient to the loss of volumes in the East, recovering from a significant drop in earnings. Since the war, clean volumes carried on MRs have shrunk but have been less impacted than LR2s. Earnings have increased in recent weeks due to low vessel resupply, high bunker prices, and volatile arbs.
West of Suez Market
In the West, a significant number of MRs were taken out of the Atlantic Basin for a prolonged period. However, the trend of this size class moving West has slowed down and even reversed slightly in recent weeks. US diesel arbs to Europe, West Africa, and Latin America are currently open and have been supportive of exports.
- West African market has been pulling MRs south from the Mediterranean
- Dangote refinery exports at 440kbd so far this month, 60% of which on MRs
- Export volumes in Northwest Europe have stayed strong
Outlook for MRs
In the West, the market is poised to remain robust, especially in the US. The US administration has extended the Jones Act waiver for another 90 days, which may be mildly beneficial to MRs. However, extremely high prompt prices for oil are impacting refining margins, possibly weighing on runs and consequently exports.