- ADNOC spent $1.3 billion on six supertankers and five gas carriers earlier this month, with all vessels set for immediate deployment.
- VLCC prices have pushed above $130 million in the second quarter, marking a record high.
- Fearnleys opened its latest commentary stating that VLCC rates are in 'stop the press' territory, indicating a significant surge.
- A Brazil-China cargo was fixed at WS197.5, while a US Gulf-China run went on subjects at $24.8 million.
- Earlier this week, Middle East-China earnings reached around $510,000 a day, with some owners achieving returns approaching $550,000 a day.
- The surge in demand is driven by oil-producing countries' shift to using their own tanker fleet amid growing unease over the Strait of Hormuz due to frequent attacks on vessels.
- ADNOC has benefited from owning its tankers, which has helped maintain oil exports from the Persian Gulf despite the Iranian blockade.
- The UAE oil major plans further purchases, with intentions to make big investments in second-hand vessels to support its operations.
- In contrast, Iraq lacks its own tankers and must rely on international traders, leading to deep discounts to motivate buyers to navigate the risky passage of Hormuz.
Supertanker prices have reached unprecedented levels, with very large crude carriers (VLCCs) now exceeding $130 million as demand surges from Middle Eastern oil producers. This spike is attributed to a strategic shift by these countries to utilize their own fleets amid rising geopolitical tensions, particularly in the Strait of Hormuz where shipping has become increasingly perilous due to frequent attacks on vessels.27
According to the Financial Times, both new and second-hand VLCCs have seen prices soar, with chartering rates also hitting record highs. ADNOC, the UAE's state oil company, recently invested $1.3 billion in six VLCCs and five very large gas carriers, emphasizing the importance of physical control over assets to maintain oil exports despite challenges like the Iranian blockade.18
Norwegian broker Fearnleys described the current market as being in “stop the press” territory, with VLCC rates rising rapidly across all segments. Recent fixtures have shown earnings for Middle East-China routes reaching around $510,000 a day, with some owners achieving returns close to $550,000 a day. The broker noted that position lists are thinning quickly, indicating that what seems expensive today could soon appear cheap.6
As the market evolves, the implications for tanker equities could be significant, with analysts suggesting that current earnings forecasts may be too low, hinting at further upside potential for investors.
“ADNOC spent $1.3 billion on six VLCCs and five VLGCs, nine of them secondhand, for rapid deployment. Middle East-China earnings reached around $510,000 a day, with some owners achieving returns approaching $550,000 a day.”
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