OPEC’s new round of production increases will boost the outlook for oil tankers.
Just last weekend, OPEC decided to increase production by 548,000 barrels per day in August and aims for another significant hike in September.
Frode Morkedal, an analyst at Clarksons, stated that this move is “clearly positive for tanker demand.” He noted that previous production increases helped OPEC avoid compensatory cuts due to overproduction by some member states, but the next two hikes will “primarily consist of new output, mostly from Saudi Arabia and largely transported by sea.”
Morkedal added, “Combined with the over 400,000 barrels per day absorbed by local power plants from May to July, Saudi Arabia could have up to 860,000 barrels per day available for export by September.”
Fredrik Dybwad of Fearnley Securities, an independent investment bank focused on shipping and maritime industries, suggested that, given overproduction, the actual figure would be closer to 330,000 barrels per day, with 230,000 barrels per day coming from the Middle East. He noted, “This move is likely to increase crude supply in the seaborne market, boosting crude tanker volumes, and could coincide with production hikes in the Atlantic Basin. Therefore, we believe this development should reinforce the positive outlook for tanker earnings in the second half of the year.”
OPEC had anticipated raising production this year, and its measures in May, June, and July exceeded earlier expectations. However, these increases previously failed to push up freight rates. Still, there are positive signs that the hikes are helping to strengthen the market.
In mid-June, Niels Rasmussen, BIMCO’s chief shipping analyst, pointed out that OPEC countries’ daily production reached 2.3 million barrels per day, the highest since 2023.
Data from trade analytics firm Kpler showed that Middle East crude exports fell from 17.3 million barrels per day in April to 17.3 million in May before rebounding to 18 million in June. Kpler forecasts Middle East crude exports to reach 20 million barrels per day in July.
Clarksons’ data on Monday showed the weighted average rate for VLCCs (Very Large Crude Carriers) dropped 4.4% from Friday to $30,900 per day. Suezmax rates fell 1.7% to $37,400 per day, while Aframax rates dipped 0.5% to $30,100 per day.
Surge in Demand
Tankers International, a UK-based tanker pool operator, is optimistic about VLCC rate prospects, noting a shift in owners’ preferences toward time charters and spot deals. The company attributes this to a surge in demand for large tankers driven by oil exports.
During the Israel-Iran conflict, charter rates from the Middle East Gulf to Asia briefly soared to over $100,000 per day but have since retreated to $27,700 per day—down 2% in 24 hours and 43% over the week.
Charlie Grey, CEO of Tankers International, emphasized the Middle East’s critical role in trade. “In the first half of 2025, out of an average global monthly VLCC loadings of about 320 vessels, the Middle East Gulf accounts for roughly 210, excluding sanctioned cargoes.” He believes that as summer ends, more oil production will enter the global market, and alignment with OPEC+ targets could lead to a significant rise in shipments.
Grey added, “We’re seeing a structural shift as market dynamics evolve and the spot market gains favor among owners. Fixed time charters are giving way to more flexible, upside-focused spot trading, supported by commercial tanker pools like ours.”
Breakwave Advisors, a New York-based investment research firm, noted that VLCCs are facing a reality check amid easing Middle East tensions. “Most critically, the Strait of Hormuz remains open, with the latest AIS tracking data showing a clear uptick in vessel transits, signaling improved confidence and operational continuity through this strategic chokepoint.”
“Interestingly, despite typical summer seasonality dampening demand forecasts, Asian oil demand reached relatively high levels by late June. While vessel supply remains a key downside factor, this surge provides a supportive pillar for potential tanker market rebalancing,” Breakwave Advisors concluded.
Wave of New Orders
With rising demand for fleet renewal and expected growth in oil production, VLCCs are set for a newbuilding boom.
Last week, Hanwha Shipping ordered a 300,000-dwt VLCC equipped with a scrubber, bringing its total under-construction large tankers to three—the other two were contracted in October 2024.
According to TradeWinds, up to 18 more VLCC newbuild orders worth over $2.25 billion could materialize in the coming months.
Shipbuilding industry sources report growing interest in VLCC newbuilds, with several major shipping firms in talks with Chinese and South Korean yards.
Notable owners such as Belgium’s CMB.Tech, Greece’s Tsakos Shipping & Trading, Taiwan’s Formosa Plastics Marine Corp, South Korea’s Pan Ocean, and India’s SCI are negotiating large tanker orders. Five Chinese and South Korean shipyards are competing, with most companies inquiring about at least two vessels and one unnamed owner reportedly considering up to four.
