Mcquilling Provides Analysis of Tanker Market Outlook for 2025-2029

McQuilling Services has recently revealed its insights on the tanker market in the years 2025-2029. The 183-page document offers an in-depth analysis of various factors influencing the oil industry, including economic trends, geopolitical situations, tanker supply, and demand estimations for eight classes of vessels. By utilizing advanced quantitative modeling techniques, the report generates a five-year forecast for spot rates and time charter equivalents (TCE) across 27 key routes for tankers and five additional triangular trades.

The report’s base case scenario takes into account several factors that are expected to shape the market, such as continued Russian oil flows, reductions in Iranian exports, potential changes in US tariff policies on Canadian and Mexican oil imports, and a smooth functioning of the Panama Canal. Earnings projections are based on historical market data and anticipated shifts in supply and demand dynamics influenced by global economic conditions and expectations in the oil sector.

Traditionally, the VLCC segment’s earnings have served as a key market indicator. However, recent geopolitical events, such as the EU’s ban on Russian oil imports and pricing mechanisms, have led to substantial changes in market dynamics, with increased demand for Suezmax and Aframax tankers. To balance the impact of these events, significant orders for new vessels, specifically Suezmaxes and Aframaxes, have been placed in the past two years.

The outlook for crude tankers suggests a robust demand for VLCCs in the coming years, driven by various factors such as economic trends and potential changes in interest rates set by the US Federal Reserve. Predictions indicate a weaker US dollar towards the end of 2025, potentially leading to a contango structure in oil markets that could benefit tanker rates, particularly for VLCCs, due to lower new vessel orders projected for upcoming years. Earnings forecasts for 2025 indicate daily rates of US $51,600 for VLCCs and US $53,900 for Aframaxes and US $51,000 for Suezmaxes (basis ECO tankers without scrubbers).

In the product tanker segment, earnings in 2024 remained strong compared to historical averages, with LR2 tankers reaching peak levels since 2000. Amidst concerns of a potential economic downturn, demand for clean tankers is expected to remain stable in 2025 while showing signs of growth in 2026. Factors such as increased CPP exports from India and shifts in demand patterns from the Middle East to Europe are expected to influence market dynamics positively.

Despite positive demand trends, challenges on the supply side loom large, with a record number of orders placed for various tanker classes in recent years. The growing fleet size is anticipated to put pressure on earnings, particularly in the outer years of the forecasting period. Additionally, stricter environmental regulations, including the 2nd year phase-in ratio of the EU ETS, FuelEU Maritime regulations, and impending IMO targets, are expected to shape operational practices and investment decisions for ship owners in the coming years.

As the industry navigates through volatile waters, both from market forces and regulatory requirements, stakeholders will need to adapt strategically to capitalize on emerging opportunities and mitigate risks associated with changing market conditions and regulatory landscapes.