The VLCC market started to move at the end of October after a sustained three month period of relatively high fixing in the Middle East and Atlantic Basin.
Sustained support and charterers fixing further ahead in the run-up to the holiday period, meant that earnings were maintained at around $50,000 per day on the benchmark AG-Japan (TD3) route for the final two months of the year.
In the first instance, there was no move in the Suezmax and Aframax markets, with representative earnings for these vessels at only $15,000 per day and $8,000 per day respectively, during most of November last year.
Then, at the end of that month, the pressure on the VLCC market finally spilt over into the Suezmax sector, with VL cargoes out of West Africa being split into Suezmax cargoes.
Aframax boom
Finally, in December the Aframax market stormed ahead to levels even higher than the VLCC and Suezmax levels. In the North Sea, bad weather, delays, charterers re-entering the market for replacement tonnage and the holidays all conspired to push spot rates to more-or-less double their earlier levels and earnings to hit $70,000-80,000 per day.
Aframax markets elsewhere in the West followed the same trend, with Caribbean and Mediterranean rates also doubling. Rates also increased East of Suez, but at more muted levels of 35-45%.
Expectations are that rates and earnings will come down in January, but this goes to show that in what is a relatively weak fundamental crude tanker market, there are conditions where rates and earnings can spike at extreme levels.