Untangling the threads of 2025 tanker markets
With only a few days left until we welcome 2025, we take a trip down memory lane and the key themes that held the market’s interest back in December 2023 as we looked into the crystal ball of the new year.
From the extension of OPEC’s 2.2m b/d cuts into the first quarter of the year to the critical-for-tonne-miles question of choosing between transiting the Suez or the Cape of Good Hope, the list of parallels with the current crude tanker market appears surprisingly lengthy.
The main difference one could argue is that as of December 2024, the above is only the tip of the iceberg in the hotchpotch of geopolitical ‘what ifs’ that must be considered when attempting to forecast the market.
On one hand, with the transfer of power in the world’s largest economy far from complete, more threats of protectionist measures against regimes seemingly allied with the US have surfaced, paving the way for a quadrennium of wildcards.
On the other hand, peace deals in the Middle East are rapidly succeeded by new armed fronts, underpinning a shift in power dynamics in the region which, initial estimates suggest is more likely to affect miles rather than tonnes.
Looking at the rapidly changing political scene in the Middle East, we see little underlying impact on crude volumes out of the region due to the recent ceasefire between Israel and Lebanon as well as the toppling of the Assad administration in Syria.
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Focusing on the latter, raging instability has turned Syria into a net oil importer since 2012, with much of the tumbling domestic demand satisfied by imports from the politically affiliated Iran (54 kb/d YtD).
The transition of power is likely to coincide with a diversification of the country’s supplies, possibly from elsewhere in the MEG, further limiting Iran’s crude client pool. Most importantly, both developments emerge as diplomatic setbacks for Iran and Russia, removing yet another name from the list of regional allies.
This gives Israel the upper hand on the Hamas front, possibly accelerating a deal that would see an easing of the Red Sea crisis. Our base scenario assumes that the crisis persists throughout 2025 offering an estimated 2.7% boost in the sector’s tonne-miles versus a normalisation of flows scenario.
While we acknowledge that untangling the threads of geopolitics is a rather tricky task largely plagued by subjective interpretations, in its last Crude Tankers report of the year, Howe Robinson attempts to translate these latest developments into crude balances, trade flows and subsequently freight forecasts.
To find out more about Howe Robinson’s tanker research and regular publications, please visit www.howerobinson.com/tankers/
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