The product tanker market has shown unexpectedly optimistic momentum at the beginning of the new year. Shipbroker Affinity Research noted in its latest weekly report that despite a lengthy AG (Arabian Gulf) LR (Long Range) tonnage list in December 2025, which led to widespread pessimism and predictions of a weak start, LR2 vessels have performed against the trend. With intensive inquiries, that tonnage list has been nearly cleared, leaving very few available vessels in the next 12 days. If market conditions normalize, most of the tonnage will be cleared, with the remaining vessels hoping for subsequent fixtures. It should be noted that the current freight rate levels can already generate considerable TCE (Time Charter Equivalent) earnings.
Meanwhile, for the Arabian Gulf LR market, this year’s start is promising, with shipment volumes remaining steady during the holiday period. The volume in the first week significantly exceeded the average of the same period last year, as evidenced by the current tight vessel supply and market trends. The TC5 route has risen to WS190, 10 points higher than the latest 2026 average. Westbound voyages are currently all routed via the Suez Canal, yet freight rates for the Suez and Cape routes are nearly equal. Recent Suez route rates have risen from the previously fixed $3.2 million and are now approaching $3.5 million. Short-haul transportation is also busy, continuously squeezing available tonnage and supporting firm freight rates. For example, conventional time-charter vessels under 15 years old have been fixed at $600,000 for the Jubail-Fujairah route. Overall, the start of the year is encouraging. The LR1 fleet on North Asian routes is equally busy; diversified cargo sources have led to a shortage of MR tonnage, prompting charterers to seek larger vessel types. Despite the optimistic sentiment in the Middle East market, LR1 backhaul routes have relatively fewer shipments, and their rates often lag behind those of MR vessels. A recent cargo to Korea-Australia was fixed at 60x WS180, but following the TC5 trend, its rate is highly likely to climb to WS190. The situation for LR2 vessels is similar, showing competitive cargo volumes for direct voyages to Singapore. Supported by TC1 volumes and the robust fundamentals of the Arabian Gulf market, rates to Australia are expected to rise accordingly.
Furthermore, the MR vessel market on the NWE route is active. Tonnage remained tight throughout the week, especially with more frequent WAFR route shipments. The TC2 route was fixed multiple times at WS110, although the latest near-concluded fixture has risen to WS115. Currently, the premium for the West Africa route relative to TC2 has reached WS index +55 points, with the latest reported near-concluded fixture at WS170. As the TC14 route rate has strongly climbed to WS190, owners are actively accumulating tonnage for TA (Transatlantic) routes to meet demand in the rising freight market. Available tonnage remains tight, and the WAFR route premium is expected to continue into next week.
However, the Mediterranean medium-range tanker market is relatively quiet, as not all markets have recovered from the holiday mode. Freight rates are under pressure, with the market’s first inquiry pushing down the Med-Transatlantic route rate by 15 points to WS125. By the latter part of the week, both on and off-market activity improved, and rates have now stabilized at WS130 for the TA route and WS150 for the Med-WAFR route, with an expected upward trend.
