First West of Suez VLCC fixed using 2024 Worldscale rates amid surging crude tanker market

The first Very Large Crude Carrier fixture in the West of Suez region using the updated 2024 Worldscale flat rates has been announced for a West Africa-Far East voyage, as market participants begin the process of transitioning away from the 2023 rates, further driving up the Worldscale multipliers being paid out by charterers for a rapidly firming dirty tanker market.

In the evening of Jan. 8, it was reported that Sinochem had put the Front Eira on subjects for a 260,000 mt cargo loading in WAF and discharging in China, off a Feb. 4-6 laycan, at w72.5.

The VLCC and Suezmax markets are traditionally slower to transition to the new year's Worldscale flat rates than the Aframax market, as their typical loading windows are further advanced, and VLCC voyages especially are less liquid.

The first Aframax fixtures using the 2024 Worldscale flat rates were reported on Jan. 2, with Unipec placing the Sea Jaguar on subjects for an 80,000 mt Es Sider-Aliaga cargo, off a Jan. 11 laycan, at w150 and Total placing the Karavas on subjects for an 80,000 mt Algeria-Med cargo, off a Jan. 9 laycan, at w160.

Voyages fixed using the 2024 flat rates have tended to be several Worldscale points higher than those using the 2023 rates, as the flat rates have fallen from the previous year owing to decreased bunker prices.

Firming dirty tanker rates

Although the transition to 2024 flat rates has contributed to fixtures being settled at higher Worldscale multipliers, freight rates have been surging regardless since the beginning of the new year.

Platts, part of S&P Global Commodity Insights, assessed freight on the 260,000 mt WAF-East route at w72.5 on Jan. 8, up w11.5 on the day.

In absolute terms, freight for the 260,000 mt WAF-East route has risen by $4.08/mt from $21.69/mt on Jan. 2 to a one-month high of $25.77/mt on Jan. 8. Prior to the spike in dirty tanker freight rates in October-November 2023, the last time $/mt values for the WAF-East route were this high was in June 2023.

As with the firming WAF Suezmax segment, sources have attributed the rise in WAF VLCC rates to a booming US Gulf market, surging inquiry levels and a tight tonnage situation.

"The market is blowing up, I've never seen it this busy before," a UK-based VLCC broker said.

The same broker noted that, on Friday, Jan. 5, eight outstanding cargoes were reported in the US Gulf, three cargoes were looking for vessels in South America, three were available in WAF and at least two were looking for vessels in the Persian Gulf.