Persistent Houthi attacks on ships in Red Sea and Gulf of Aden force many vessels to reroute around Cape of Good Hope. This shift is expected to continue throughout 2024, increasing average sailing distances for crude and product tankers and impacting market dynamics and demand.

Sailing distances for crude tankers are projected to rise by 7% in 2024, boosting tonne miles demand by 8-9%. Despite an expected 5.5% decrease in 2025 as routes normalize, overall demand remains strong in 2024 compared to 2023.

For product tankers, sailing distances are expected to increase by 4% in 2024, with tonne miles demand growing by 5-6%. In 2025, a 5% reduction in sailing distances is forecasted, leading to a 3-4% drop in demand.

Big tanker charterers to relax their ‘under 20’ rule Big tanker charterers to relax their ‘under 20’ rule

Despite a weak start in 2024, with tonne miles down 5-6% year-on-year, the crude tanker market is anticipated to remain robust in both 2024 and 2025. However, the product tanker market may see a weaker supply/demand balance in 2025 due to faster supply growth.

The Baltic Dry and Clean Tanker Indices have started 2024 weaker than in 2023, yet remain significantly higher than the past decade’s average. Newbuilding prices surged by 33%, and prices for five-year-old ships increased by 60%, now valued at nearly the same as newbuilds.

IMF forecasts 3.2% global economic growth in 2024 and 2025, similar to 2023. European Union, South & West Asia, South & Central America, and Sub-Saharan Africa are expected to see accelerated growth. The International Energy Agency (IEA) projects global oil demand to increase by 1.1 mbpd in 2024 and 1.2 mbpd in 2025.

Refinery runs are set to rise mainly in Asia/Oceania and Africa, driven by new refinery openings in Nigeria and China. Crude tanker fleet capacity is expected to grow modestly by 0.5% in 2024 and 1.2% in 2025. Product tanker capacity growth is higher, at 1.8% in 2024 and 4.7% in 2025.

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Editor: Kemal Can Kayar