More tankers avoid the Red Sea, lifting Suezmax and Aframax rates.

Suezmax rates between the Middle East Gulf and the Mediterranean spiked last week as the continuing conflict in the Red Sea drove increased avoidance of the Suez Canal and an even greater war premium. Tonne-miles continue moving higher as evidence shows Mediterranean to South East Asia cargo is now diverting around the Cape of Good Hope (South Africa).

Aframax markets were more mixed but generally trended higher. Rates in the Mediterranean strengthened as substantial off-market fixing shortened the tonnage list. In the Black Sea, activity levels were high but insufficient to move rates higher, while limited activity levels in the UK Continent saw rates soften slightly.

“Tanker disruptions in the Red Sea escalate forcing a greater share of vessels via the Cape of Good Hope.”

VLCC markets had a quiet week, which saw charterers take advantage of weakening sentiment to capture lower rates. Sentiment was particularly affected on the Middle East Gulf to China route as China demand concerns escalated. Tonnage lists grew which may reduce VLCC upside short-term.

LR2 rates caught headlines this week, with the average earnings $/day jumping almost 100% week-on-week, according to Clarksons. Although they are classed as product tankers, they can often arbitrage into Aframax markets, given their ability to carry both clean and dirty petroleum products. The LR2 rate surge driven, again, by the Red Sea conflict, could support Aframax rates in the coming weeks.