Massive cash flow, but too expensive

研报英文原文证据摘录

Massive cash flow, but too expensive

Frontline

Optimal level of disruptions

According to ship tracking data, exports of both crude and products are now rising again.

In the crude tanker market, global crude exports are again above 40m bpd and closing in

on the lows seen at the start of 2025. With the US having started to release SPRs, which

spend 2-3x longer time on the sea compared to Middle East exports, crude oil-on-water

is now actually 11% higher y-o-y, albeit 8% lower than at the start of this year. Product

export volumes have also fallen by around 10% since the closure of the Hormuz Strait.

However, the disruption has merely returned global flows to levels last seen in 2025, while

refinery margins have reached highs not experienced since the early days following Russia's

invasion of Ukraine in 2022.

Overall, the high rates — with VLCC rates from Oman and the US at around USD 110k/day,

Suezmax and Aframax at approximately USD 80k/day, and MR at USD 40k/day — indicate

that fleet utilisation remains tight enough for shipowners to capture much of the geographical

arbitrage. That said, we note that rates for most vessel sizes are now declining week-on-

week, and that there is a considerable spread in tanker rates.

As highlighted in recent research (see e.g. our 5 May Shipping Daily), we view the current

state of the tanker market, with a significant disruption in oil supply but no full stop in the

~15m bpd that normally passes the Strait of Hormuz, as close to a "best-case" scenario, as

the higher oil price, coupled with genuine concerns about a shortfall in prompt oil deliveries,

has led to an extraordinary increase in willingness to pay for transportation.

However, if the war escalates and substantial amounts of the Middle East's production and/