Tanker Market: The Switch From Clean to Dirty Tankers Is Intensifying<\/p>\n
Hellenic Shipping News<\/p>\n
significant trend is underway in the tanker market, with a switch from clean to dirty tankers underway. In its latest weekly report, shipbroker Gibson said that \u201cclean to dirty switching first gathered pace in the fourth quarter of 2025 with recent geopolitical developments further accelerating dirty ups in recent months. With the outbreak of war paralysing the Middle East Gulf, approximately 2.4mbd of clean products have been removed from the tanker market. With regional crude exports and refining activity subdued, tonnage fled the East in a mass exodus toward the Atlantic Basin in search of employment\u201d.<\/p>\n
According to Gibson, \u201cin the West, a significant operational shift occurred as owners dirtied-up coated LR2s to capture soaring returns in the dirty segments. This trend accelerated in April as TD25 spot earnings spiked to an average of $153,250\/day (eco), up from $85,750\/day in February. While clean rates also strengthened, they lagged significantly behind; TC15 spot returns (via Cape) averaged at $81,750\/day in April, compared to just $27,000\/day in February. Demand was underpinned by a surge in US crude exports, bolstered by wide open arb and strategic reserve releases, which fuelled the TD25 route, whilst simultaneously increasing Aframax shuttling requirements for VLCC reverse lightering. The return of Venezuelan crude to the mainstream market further tightened regional demand, with total export volume to US Gulf hitting 485kbd in April, up from 280kbd in January\u201d.<\/p>\n
\u201cBeyond the Atlantic, the Pacific served as a secondary refuge. After discharging Middle Eastern naphtha in Asia, many owners faced a dearth of clean export options and chose to dirty up for the Transpacific trade. This shift saw vessels competing for TMX cargoes out of Vancouver or ballasting as far south as Argentina to capitalize on debottlenecked export facilities. However, the narrative took a sharp turn in the latter half of April. The share of the coated LR2 fleet engaged in dirty trades had reached approximately 52.5%. This, combined with an influx of Aframax tonnage from the East and the easing of seasonal weather delays has seen rates \u201ccollapse\u201d towards pre-War levels, albeit still at historically high levels\u201d, the shipbroker said.<\/p>\n
Gibson added that \u201clooking ahead, the prospect of these dirtied-up LR2s returning to the clean trades remains limited. Even if transit through the Strait of Hormuz is reinstated, the physical damage to Middle Eastern refineries suggests a slow recovery in CPP export volumes, meaning that fewer LR2s are required until export volumes fully recover. However, it is also important to note that cleaning up a dirty LR2 incurs cost and is not as easy as switching into dirty trade. As such it may take some time for LR2s to clean up and reposition West, if and when Hormuz normalises, potentially adding upside volatility to LR2 rates\u201d.<\/p>\n
\u201cLooking back West, a critical variable remains the Mediterranean and Black Sea. Russian crude and fuel oil exports have continued to decline following Ukrainian attacks on processing facilities. While the European Union recently kept a full maritime services ban on Russian crude on hold, any reversal of this policy would alter the market dynamics. Such a ban would immediately push G7-compliant tankers out of Russian trades, likely creating a short-term supply glut in conventional markets. However, this would eventually be countered by a gradual migration of tonnage into dark fleet. Aframax demand could also come under pressure from lower Mexican exports where declining production and stronger domestic refinery demand is impacting exports, though rising Venezuelan production and the potential for higher Kurdish volumes from Ceyhan could offset any Mexican declines\u201d, Gibson noted.<\/p>\n
The shipbroker concluded that \u201cperhaps the most daunting chapter of this story lies in the looming supply pressure. 83 LR2\/Aframax newbuilds are slated for delivery throughout 2026 \u2014 a level of fleet growth not witnessed since 2009. Unless clean trading volumes recover rapidly, the disparity in earnings is likely to trigger even more dirty-up activity, creating a cascading effect that could ultimately drag down Aframax earnings as well, leaving the industry to navigate a high-supply, high-uncertainty environment for the remainder of the year. That being said, the sector has shown remarkable resilience in recent years, and may continue to surprise to the upside\u201d.<\/p>\n
Nikos Roussanoglou, Hellenic Shipping News Worldwide<\/p>\n
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