The global crude oil transportation market is experiencing its most intense shipbuilding boom in nearly a decade. The latest data shows that the ratio of crude oil tanker orders to fleet size has risen to 14.1%, the highest level since 2016, indicating that the global aging fleet is expected to undergo a large-scale renewal.
According to the latest analysis released by BIMCO, this change is in stark contrast to the low point in March 2023. At that time, influenced by the order volume hitting a historical low in 2022, the ratio was only 2.8%.
BIMCO’s Chief Shipping Analyst Niels Rasmussen pointed out: “The crude tanker /fleet ratio has continued to recover after bottoming out and has now climbed to 14.1%, a nine-year high. The current wave of orders may initiate the fleet renewal process.”
Since 2023, shipowners have placed orders for 325 crude oil tankers, with a total deadweight tonnage of 68.7 million tons. The current orderbook stands at 309 ships, with 65.8 million deadweight tons, and deliveries are expected to peak in 2027, reaching 28.2 million tons. It is worth noting that 98% of the current capacity under construction is expected to be fully delivered by the end of 2028.
In terms of regional distribution, Asian shipyards continue to firmly control this sector. Chinese shipyards rank first with a 60% share of the orderbook, followed by South Korea (31%) and Japan (8%). In terms of ship types, Suezmax and VLCC remain the mainstays of the market, contributing 135 and 128 orders respectively.
However, this round of expansion coincides with an increasingly uncertain global oil demand outlook. The International Energy Agency, in its latest World Energy Outlook, predicts that the average annual growth rate of global oil demand from 2024 to 2035 will be at most 0.7%.
Rasmussen cautioned, “Compared with future global oil demand growth expectations, the current orderbook size appears relatively large.”
Under a stricter decarbonization scenario aligned with the Paris Agreement’s 1.5°C pathway, the International Energy Agency even predicts that global oil demand will shrink by 3.3% annually.
Against this backdrop, whether the fleet can maintain a supply-demand balance depends largely on the pace of scrapping older vessels. Currently, 18.2% of the entire crude oil tanker fleet is 20 years or older, accounting for 17.2% of the total fleet’s capacity, slightly higher than the current orderbook size.
However, the shipbreaking prospects face significant challenges. Rasmussen warned that over 40% of the potentially scrappable capacity comes from ships currently under sanctions. Sanctions restrict the sale of these vessels, which could delay their scrapping process and reduce their scrap value.
“Although the orderbook is substantial and demand growth may be weak, if older ships can be successfully phased out, supply and demand could still remain balanced,” Rasmussen concluded.
