McQuilling Services has just released the 26th anniversary edition of its keenly read five-year tanker outlook. The 168-page report provides a detailed analysis of oil fundamentals, global economic and geopolitical context in addition to tanker demand and supply projections across eight vessel classes. The interaction of tanker demand and vessel supply variables is processed using advanced quantitative modelling to produce a five-year spot and time charter equivalent (TCE) forecast for eight vessel classes across 24 benchmark tanker trades, plus four triangulated trades. Also included in the report is a five-year asset price outlook as well as one and three-year-time charter rate forecasts through 2027.
The American firm’s prevailing view for the crude tanker markets continues to favour an improving earnings environment over the 2024/25 years, aided by well-known supply side developments, including the bare orderbook for most tanker segments as tight yard capacity and correspondingly high newbuilding prices underpin what McQuilling describes as an “inevitable owners’ market” in the years to come. However, McQuilling analysis finds a bias towards the mid-size tanker crude segments, particularly in the front years, due to the reshuffling of trade flows from Russia to Asian markets and the overutilisation of aframaxes to conduct these marine flows. For VLCCs, McQuilling finds 2023 to be less fruitful as demand is expected to fall by 6.6%year-on-year.
McQuilling’s call for 2023 TCEs is $29,000 a day for VLCCs, while aframaxes and suezmaxes outperform at $55,000 a day and $47,000 a day respectively. These estimates are basis non-eco tankers without scrubbers.
Turning to product tankers, McQuilling reckons the Russian sanctions will exacerbate the demand growth for clean tankers and particularly for the LR segments. With a moderate orderbook in hand, McQuilling is projecting LR2s to earn $56,000 a day on average over the next three years, basis non-eco tankers without scrubbers, out-earning MRs by 58% during this period.
The company’s forecasting models show secondhand values for aframax and LR2 tankers have the most upside from current assessments over the next three years.