Industry Note No. 10 - Perfect Storm for VLCC Rates?

Marine transportation demand for crude tankers usually finds support in the final three months of the year as refiners complete maintenance in-time for winter grade fuel requirements. In turn, the supply/demand balance tilts in the owners’ favor, creating a seasonal opportunity to push rates higher until the tide reverses once again at the end of Q1. In this year’s fourth quarter, there is an additional element that is working in the owners’ corner – low bunker costs. The combination of seasonally higher freight revenues and fundamentally pressured fuel costs is creating a perfect storm, of the beneficial kind, in the short-term for tanker owners.