Mette Frederiksen

As the global VLCC community gathers in Dubai for Bahri Week, all eyes are once again on OPEC and Middle East production policy. OPEC+ members, led by Saudi Arabia, have begun unwinding their voluntary production cuts, and the return of supply is reshaping momentum across both oil and tanker markets. After more than a year of orchestrated oil market tightness, the reintroduction of barrels is re-establishing the Middle East as the core driver of VLCC demand.

In oil markets, the balance has shifted subtly but decisively. As Middle Eastern producers have increased output, a growing share of those incremental barrels has been drawn into Asia, which remains the deepest and most price-sensitive demand centre. Earlier this year, Asian refiners relied more on stock drawdowns and opportunistic Atlantic Basin cargoes, but as Middle Eastern supply loosened and differentials softened, their focus has swung back toward to the region.

For the tanker market, this evolution has been unambiguously positive. As OPEC+ producers have completed their rebalancing after earlier oversupply and the Middle East moves beyond its seasonal demand peak, more crude oil is now moving into the export market. That is already visible in rising VLCC cargo counts and fixture momentum. The increase has not been dramatic — but it has been consistent and sustainable. It is precisely this kind of predictable, volume-driven trade, rather than sporadic arbitrage flows, that underpins lasting rate support for supertankers.

The VLCC segment remains particularly responsive to Middle East oil flows. With 85% of crude and condensate exported from the region in 2024–2025, already being carried by VLCCs, and 75% of the OPEC+ production increase stemming from this region, the scale of the opportunity is obvious. Each additional barrel made available for export directly translates into greater long-haul transport demand — and VLCCs are uniquely positioned to absorb that trade.

On the supply side, vessel availability remains tight, and with no significant movement in the VLCC fleet size the freight market direction will remain driven by consistent vessel demand in the near term. VLCC fleet growth is effectively negligible this year, with new deliveries limited. Even with more newbuildings scheduled to enter the market in 2026, much of that additional capacity will be offset by an ageing fleet that is gradually seeing its utilisation decline. In practice, the effective reduction in trading ability from older vessels is likely to outweigh the capacity added from new tonnage.

Even with the improving fundamentals, the market is not without risks. Geopolitical volatility in the Middle East and Red Sea remains ever-present and continues to cast a shadow on freight dynamics. The current demand strength also depends on Asian refiners maintaining healthy margins — a downturn there could temper cargo intake. And while OPEC+ is currently prioritising exports, its strategy remains reactive and could pivot back toward restraint if crude prices come under pressure.

Looking ahead, the return of Middle Eastern supply appears to be more than a temporary boost — it signals a structural shift in the fundamentals supporting the VLCC market. With Asia continuing to pull incremental barrels and Middle Eastern exports moving back toward growth rather than restriction, the demand base for VLCCs is strengthening. Combined with limited net fleet expansion and an ageing fleet, the freight market is set to be driven increasingly by cargo demand rather than ship supply. While geopolitical and policy risks remain in view, the balance of momentum has turned decisively positive, and the current strength in the VLCC freight market is a reflection of this shift.

This year marks Tankers International’s 25th anniversary, a quarter of a century since the launch of the world’s leading VLCC pool, backed by some of the world’s leading ship owners. During that time, the crude tanker market has experienced profound change.

From regulatory shifts and shipbuilding cycles to evolving trade routes, new customer profiles, geopolitical shifts, and the rise of data-driven decision-making, the market we operate in today looks almost unrecognisable compared to 2000, when the TI Pool started operating. However, amidst all these changes, one constant remains, the vital role of VLCCs in powering global trade and meeting the world’s energy needs.

As we celebrate this significant milestone, it’s worth reflecting on the ‘then and now’ to explore just how dramatically the industry has changed.

Regulation: From double hulls to decarbonisation

In the early 2000s, the industry was adapting to the Oil Pollution Act of 1990 (OPA90), which phased out single-hull tankers in favour of more secure, double-hull designs. This sparked a wave of newbuilding orders and set higher safety and environmental standards across the tanker fleet.

Fast-forward two decades and the focus has shifted from structural safety to emissions reduction. The IMO 2020 sulphur cap, effective from January 1st, 2020, established a global sulphur cap of 0.5% on marine fuels. This forced shipowners to make a strategic choice; to run vessels on more expensive low sulphur fuel oil, to retrofit existing vessels with scrubbers or to invest in new, compliant tonnage.

As a result, new ship designs increasingly featured scrubber systems built into their propulsion setups to ensure compliance from the outset of the new regulation.

Today, the innovation drive continues for shipowners, but the focus has shifted towards adopting alternative, lower-emission fuels such as LNG, ammonia, and methanol. With no clear consensus on the most effective solution for VLCCs, owners are pursuing a range of propulsion options, leading to a greater variation in newbuilding designs.

In recent years and in the years to come, the drive for decarbonisation measures and regulations has only intensified. Emerging frameworks such as the EU ETS and the IMO’s CII should accelerate the scrapping of older, inefficient vessels, while driving demand for dual-fuel and alternative-fuel-ready newbuilds. The next 25 years will likely see a fragmented but steadily advancing adoption of LNG, methanol, ammonia, and other alternative fuels.

Orderbook and newbuildings

The VLCC orderbook has historically been cyclical. In the early to mid-2000s, surging oil demand from China and the need to build new tankers to transport this extra demand, overwhelmed shipyards and this led to long delivery lead times. This surge was further amplified by OPA90, which required the phase-out of single-hulled tankers in favour of double-hulled designs. As a result, the orderbook-to-fleet ratio climbed above 50%, peaking in 2009 with more than 250 VLCCs on order.

Today, the VLCC market looks very different. Last year, just one single VLCC was delivered, reflecting the industry’s hesitation to commit due to the fuel-transition uncertainty. However, with around 150 VLCCs already over 20 years old, fleet renewal is, once again, unavoidable.

The current orderbook stands at just over 100 vessels, roughly 12% of the trading fleet, and the VLCCs being built today are fundamentally different from their counterparts 25 years ago with optimised hull designs, energy-saving devices, and dual-fuel capabilities, designed not just for efficiency but for flexibility in an era of regulatory uncertainty.

Trade routes: Shift to the east and longer hauls

When Tankers International was formed in 2000, VLCC trade routes looked very different from what they are today, though they have always reflected the geography of oil supply and demand.

In the early 2000s, crude oil flows ran primarily from the Middle East to the US and Europe. Over time, however, the centre of demand shifted decisively eastward.

China’s accession to the World Trade Organization in 2001 triggered a surge in manufacturing and export-led growth, driving a greater demand for crude oil. The resulting economic boom transformed the VLCC market, with tonnemiles climbing as crude moved, not only from the Middle East, but also from West Africa and Latin America to Asia. At the same time, the US shale revolution sharply reduced American oil imports, cutting once-dominant transatlantic flows to a fraction of their former levels.

Over the past 25 years, VLCC trade routes have evolved with continued Middle East-to-Asia flows, and now increasing volumes from South America and the US, and long-haul tonnemiles driving demand. As Asian consumption continues to rise and South America emerges as a major supply hub, the eastward momentum is expected to persist, supporting VLCC demand well into the future.

Customers: From oil majors to traders and NOCs

In the early years of the Pool, Western oil majors and NOCs dominated VLCC chartering, often backed by their own fleets. Over time, many oil majors divested their ships and shifted to chartering from independent owners.

Meanwhile, commodity trading houses have emerged as some of the most active and influential charterers, leveraging VLCCs to move cargoes rapidly in pursuit of opportunity trading. NOCs from Asia and the Middle East have also built sophisticated trading arms, seeking greater control over their supply chains.

Looking ahead, new customer types may emerge, the ESG-driven charterers prioritising ‘green’ shipping tonnage on one side, and charterers of sanctioned ‘dark fleet’ tonnage on the other, reflecting the increasingly fragmented market landscape.

Geopolitics and its impact on the market

Geopolitics have always shaped tanker markets, but the risks have evolved. In the early 2000s, concerns centred on Middle Eastern supply disruptions, with events like 9/11 and the Iraq War creating war-risk premiums and sudden spikes in freight rates.

Today, the focus is less on physical supply disruption and more on sanctions and trade fragmentation. The Russia–Ukraine conflict and G7 price cap have re-routed oil flows and spawned a shadow fleet, increasing tonnemiles and reshaping competition.

At the same time, U.S. shale production and growing supply from South America have added supply resilience, diversifying global flows while also creating new geopolitical variables tied to trade policy.

Technology and data

Perhaps the most dramatic change has been the industry’s adoption of technology and data. In 2000, chartering was done by phone and fax, AIS was still in its infancy, and information was fragmented. Market intelligence relied on experience, instinct, and personal networks.

Today, AIS tracking, satellite imagery, and integrated data platforms have made the market almost entirely transparent. Sophisticated analytics guide decisions on routing, congestion, and supply-demand balances, while onboard connectivity has improved communication and seafarer welfare.

Looking forward, Artificial Intelligence (AI) promises even greater optimisation, whether in predictive maintenance, market forecasting, or route planning, while the human element remains essential for negotiation, client relationships, and judgement calls that data alone cannot provide.

The future of the VLCC market

From emerging regulations to trade routes, and the tech boom, the VLCC tanker market has undergone a profound transformation over the past 25 years.

As Tankers International marks its 25th anniversary, one thing is clear, while the challenges facing the VLCC sector continue to evolve, so do the opportunities for innovation and market adaptation, as the industry continues to grow and change.

The VLCC freight market has gained momentum in the first half of 2025, with earnings generally higher compared to the latter half of 2024. This improvement comes despite various uncertainties and evolving market dynamics, illustrating the market’s resilience.

One significant driver has been the impact of tariffs, particularly the threat of US tariffs on China. This has led to a decrease in VLCC liftings from the US to China, impacting tonne-miles due to the long-haul nature of this route. In general, VLCC volumes out of the US have declined overall, indicating that American crude oil has been exported on smaller tankers to more localised markets.

The return of OPEC+ voluntary production cuts also played a role in market dynamics. While headline figures point to rising output, much of this increase has been masked by some countries compensating for prior over-production. Additionally, the increase in supply also coincides with regional demand peak in the Middle East. This means we have not seen a significant change in exports from this supply growth. However, mainstream VLCC fixture counts in the Arabian Gulf have shown an upward trend. Looking ahead to the second half of 2025, more barrels will become available for exports as over-producers catch up with targets and seasonal local demand begins to fade.

Sanctioned crude producers, particularly in Iran, continue to disrupt the market. While Iranian exports have been at high levels, the recent escalation of hostilities between Iran and Israel has heightened significant geopolitical risk. Tensions over the Strait of Hormuz, a crucial geopolitical chokepoint, have led to increased insurance premiums and a potential shift in charterer preferences for alternative loading regions. Although the recent ceasefire has brought a measure of stability, the region remains a source of potential volatility for oil flows and tanker operations. Any renewed tensions could be capable of swiftly altering market dynamics.

On a more positive note for VLCCs, South America, especially Brazil, has emerged as a significant growth area. Increased crude supply, combined with tightening sanctions on dark fleet tankers and China’s retaliatory tariffs on US crude, has led to a substantial rise in VLCC shipments from Brazil to China. These long-haul voyages are highly supportive of tonne-miles, reinforcing the region’s growing strategic importance in global trade flows.

Global oil demand continues to rise, albeit at a slower pace. China remains a key driver for the VLCC segment, and despite macroeconomic pressure and a slowdown in demand growth, its crude imports have taken an upward trend. There’s a positive sign as China’s refinery maintenance season concludes, potentially leading to more crude oil entering their refining systems. Furthermore, mainstream tanker demand into China has increased, with a notable rise in movements from long-haul load areas like West Africa and South America. Early indications also suggest a decline in sanctioned VLCC trades into China, which could further benefit the mainstream market.

The overall VLCC fleet size remains somewhat inflated due to the continued sales of older vessels to the dark fleet, leading to historically low scrapping rates. However, the orderbook for newbuilds is relatively small. This combined with ongoing oil demand growth, contributes to a generally bullish sentiment for VLCC market microeconomics.

Looking ahead, the VLCC market appears poised for a strong second half of 2025. Geopolitical tensions, notably the Iran-Israel conflict, could continue to drive supply chain disruptions. However, shifting trade patterns due to US tariffs are redirecting long-haul VLCC routes towards growth regions in South America, generating similar valuable tonne-miles. Furthermore, as OPEC+ voluntary production cuts translate into increased actual export volumes, these additional barrels will undoubtedly boost demand for the VLCC segment. Together, these factors indicate a positive trajectory for the VLCC market in the coming months.

Geopolitics and supply shifts drive sustained VLCC demand from Brazil to China

The combination of rising Brazilian crude supply, shifting geopolitical dynamics, and price-sensitive Chinese refinery demand has led to a significant increase in VLCC shipments from Brazil to China in recent months.

Several new FPSOs (Floating Production Storage and Offloading units) came online at the end of 2024, enabling Brazil to steadily ramp up its crude oil production and exports in early 2025. According to data from Vortexa, Brazilian crude exports rebounded sharply in March to nearly 2 million barrels per day (mbd), after hitting a seasonal low of just 1.3 mbd in January.

Our proprietary fixture data reflects  the rebound. VLCC liftings from Brazil to China have increased steadily this year – from just five in January to 14 in March – with this elevated activity  sustained through April and May. This follows a downward trending VLCC cargo count throughout most of 2024, on the back of Chinese refiners buying more sanctioned Iranian oil and using dark fleet vessels to transport these barrels, diverting demand away from mainstream markets.

Several market forces are contributing to the recent upward trend. One key driver is the tightening of US sanctions targeting the dark fleet tankers linked to Iranian and Russian trades, as well as “teapot” refineries that have traditionally imported discounted sanctioned crude. With these low-cost barrels no longer accessible without the risk of facing a penalty, some refineries have turned to alternative mainstream sources. Brazil is a natural candidate.

Adding to the momentum, China’s 10% retaliatory tariffs on US crude imports continue to make American barrels uneconomical for Chinese buyers.

In March, Saudi Arabia raised its official selling prices to Asia, further straining the budgets of price-sensitive refiners and encouraging a shift to more affordable Atlantic Basin grades. Brazil’s growing export availability met that demand at the right time.

While a round voyage from the Middle East to China typically takes around 60 days, the Brazil to China roundtrip could take 100 days and more. This longer sailing duration locks in vessels for extended periods, tightening available tonnage and lending support to VLCC freight rates. As more ships are committed to the Brazil to China route, the knock-on effect benefits the wider VLCC market.

Looking ahead, the outlook remains positive for VLCCs. While OPEC+ may gradually ease production cuts and Asian buyers could resume more purchases from the Middle East, so far as we enter June, our fixture data already shows that at least 14 cargos are scheduled to be loaded from Brazil to China in June if they discharge as reported. If Brazil continues expanding its crude production, we expect the Brazil to China VLCC flow to remain strong, providing continued support and demand for VLCCs in the months to come.

Data Source: Tankers International VLCC Database

Read our Data Spotlight on historical VLCC liftings in Brazil HERE.