Photo: EuronavEuronav VLCC Anne on sea trials.

Tankers generally, but Very Large Crude Carriers VLCCs in particular, will benefit spectacularly as Europe’s energy trades transform and the ban on Russian crude oil imports comes into effect in December.

According to New York broker, Poten & Partners, the tonne-mile demand generated by European imports rose by 32per cent as a result of reducing Russian imports from 2.5m barrels per day (bpd) to 2m. “Finding alternative sources of supply for another 2m bpd will provide another massive stimulus to tonne-mile demand and tanker rates,” the broker declared.

Over the five-year period from January 2017 to January 2022, Europe imported an average of 2.7m bpd of Russian crude oil by sea, 26per cent of the seaborne total but only 14per cent in terms of tonne-miles.

Most of the oil imported into Europe was carried on smaller tankers running short-haul trades across the Baltic and Black Seas. Between March and August, however, crude oil imported by sea from Russia fell to 19per cent and, in tonne-mile terms, shed two percentage points to 12per cent.

Since the start of the war, Europe has pivoted away from Russian crude, replacing supplies with imports from the US Gulf, South America (Brazil, Guyana), West Africa, and the Middle East. Imports from the US Gulf have doubled from six to 12per cent. This has led to a significant increase in tonne-mile demand, and is a welcome shot in the arm for the recently weak large tanker sector.

The broker also noted that Russia will look for other customers for its displaced two million barrels of crude, most likely in Asia, China and India in particular. The will provide a further boost for tonne-mile demand. “The tanker market is in for a wild ride,” Poten predicted.

Source: Seatrade