MSI affirms ‘very positive outlook’ for tanker sector

Second quarter analysis by Maritime Strategies International (MSI) reveals that deadweight demand growth is about three times higher than growth in cargo volumes so far this year. This is partly due to the ‘distance effect’ adding to cargo growth, driven by hostilities in the Red Sea and reduced Suez Canal transits, the firm said.

The LR1/2 products tanker sectors demonstrated the largest shifts in voyage patterns, MSI notes, with a reduction of about two-thirds in Suez transits over the first four months of the year. Longer voyages around the Cape have boosted spot earnings to some of the best performing levels over the second quarter.

Although there is no sign of an end to Suez Canal disruption, MSI suggests that trading conditions could return to normal in 2026, assuming a reversal in the escalation of Middle East conflict.

However, if there is no resolution, an extension of high-risk conditions will drive tanker demand and earnings even higher. 

Even if the conflict continues, MSI predicts that other factors could underpin tanker demand. These include long-haul crude trade, for example, from the Americas to Asia.

MSI Director, Tim Smith, commented: “The latest MSI Base Case sees demand levels remain permanently higher, but this also contends with higher fleet levels, driven both by lower scrapping, and in the latter part of our forecast, higher deliveries as a consequence of increased ordering. The combination of these factors pushes our employment rate higher in 2024 and, though we see the utilisation rate flatten from 2025 onwards, this is at very high levels. This outlook remains very positive for the tanker sector.”

Related:New contracts will not offset aging tanker safety risk