Despite the major correction recorded in the tanker market during the month of August, freight rates are expected to recover due to favorable supply and demand data.
As stated in the latest report from shipping broker Gibsons, last month saw the lowest revenue for tankers transporting petroleum products worldwide this year.
The current market weakness is largely due to seasonality, analysts noted.
LR (Long Range) tankers have been negatively impacted by the shift of crude oil tankers such as VLCCs and Suezmaxes to product transport this summer, as Q3 is traditionally the weakest period for crude oil tankers.
In Europe, Handy and MR (Medium Range) tankers were affected by the reduction in tonne-miles due to the seasonal decline in regional exports.
In addition, there has been a sharp seasonal decline in Russian refined product exports, exacerbated by continued drone attacks on Russian refineries.
“As we move into the fourth quarter, the factors influencing the market are likely to change,” Gibsons said.
As analysts explained, seasonal maintenance at refineries in the US, the Middle East and Russia will facilitate crude oil exports.
For oil tankers, this means less competition from oil tankers, a key factor behind the recent decline.
Furthermore, LPG prices typically increase in winter relative to naphtha due to heating demand, making naphtha more competitive as a feedstock for the petrochemical industry.