

Tanker Market
OPEC Monthly Oil Market Report – June 2016
67
Spot freight rates
VLCC
VLCC freight rates dropped on average in May from the month before, down by 7%
from April, to stand at WS73 points. Increased activity at the beginning of the month
was seen to support VLCC freight rates, mainly in the Middle East and West Africa,
despite high vessel supply at that point. Spot freight rates further improved when June
requirements came onto the market.
However, rates edged down to reverse previous gains as sluggish demand in the
Middle East and West Africa combined with reduced delays in Asian ports to support
the expansion of available vessels on the tonnage list. Thus, Middle East-to-East
freight rates dropped by 3%, to stand at WS63 points. West Africa-to-East freight rates
followed the same pattern, though reflecting a higher drop of 12%, to stand at WS38
points. Freight rates for tankers operating on the Middle East-to-West route also
dropped by 8% from one month before.
Graph 7.1: Monthly averages of crude oil spot freight rates
Suezmax
As seen in the VLCC sector, Suezmax spot freight rates also underwent negative
development in May. At the beginning of the month, rates for Suezmax were weak due
to holidays and low activity, generally. Increased activity was only later able to stabilize
rates and prevent further drops.
In West Africa, spot freight rates for tankers operating on the West Africa-to-US Gulf
Coast route dropped by 21% to stand at WS63 points. Spot freight rates for tankers
operating on the Northwest Europe (NWE)-to-US Gulf Coast (USGC) route dropped by
8% to average WS63 points. Suezmax rates on both routes showed a higher decline,
compared with freight rates registered on the same routes the previous year.
20
40
60
80
100
120
140
20
40
60
80
100
120
140
May 15
Jun 15
Jul 15
Aug 15
Sep 15
Oct 15
Nov 15
Dec 15
Jan 16
Feb 16
Mar 16
Apr 16
May 16
Worldscale
Worldscale
Mediterranean/Northwest Europe (Aframax)
West Africa/USGC (Suezmax)
Middle East/Far East (VLCC)
Sources: Argus and Platts.