In 2025, the Very Large Crude Carrier (VLCC) sector continues to demonstrate robust fundamentals, supported by strong demand from China’s strategic reserve construction and historically tight fleet supply. Recent freight rate trends have been particularly impressive, driven by increased procurement activity following Saudi Arabia’s price adjustments and an extremely low volume of new vessel deliveries to the market.
Data from VesselsValue allows for a clear understanding of the tanker market’s cyclical position. While current asset values are below the 15-year highs set last year, they remain strong—VLCC values have been steadily climbing this year. Taking a 320,000 DWT, 5-year-old VLCC as an example, its value has risen from $109.8 million to $113.62 million.
This year, VLCC transactions and newbuilding orders have seen a significant year-on-year decline of approximately 27%. Transactions in the first nine months dropped to 83 vessels from 113 in the same period of 2024. Newbuilding orders have nearly halved, with only 35 recorded year-to-date compared to 69 in the same period of 2024. Record-high newbuilding prices, extended shipyard delivery lead times, and uncertainties surrounding fuel technology have suppressed new order placements, leading to a notable slowdown in VLCC transactions and newbuilding activity.
Despite uncertainties surrounding China’s long-term crude oil demand and a rising proportion of Middle Eastern procurement, shipowners remain reluctant to sell profitable assets given historically strong earnings levels. An aging fleet and extremely low demolition activity keep supply persistently tight, supporting firm asset valuations even against a backdrop of declining transaction volumes.
Notable recent transactions include: Dynacom’s acquisition of four 306,000 DWT VLCC resale vessels built by Hengli Heavy Industries, scheduled for delivery in 2026-2027, at a package price of $118 million each (VV valuation: $118.9 million); Seatankers also acquired four 306,000 DWT VLCC resale vessels built by Hengli Heavy Industries, expected for delivery in 2026, at a package price of $118 million each (VV valuation: $120 million).
One-year time charter rates for VLCCs broke through the $50,000/day mark in September, with a monthly increase of about 12% (from $46,333/day to $51,333/day). Spot rates on some routes even touched $100,000/day—the first occurrence since March 2023.
Seasonal factors and geopolitics jointly fueled this rally. China’s strategic reserve purchases of approximately 500,000 barrels per day overlapped with the cyclical demand from refineries increasing production in the fourth quarter for winter stockpiling. Saudi Arabia’s price cut of $1 per barrel on September 9th further stimulated Chinese procurement, with buyers building inventories to hedge against potential supply risks. Zero fleet growth this year and persistently low ton-mile efficiency due to rerouting have significantly tightened market supply.
The demolition market remains at an extremely low level, with only 2 VLCCs sent for scrapping this year. Faced with an increasingly aging fleet, any softening in freight rates could see demolition potential significantly tighten supply.
The VLCC market in 2025 exhibits extraordinary supply-side support, solidifying the industry’s fundamentals. Although asset values have retreated from last year’s peak, they remain at historically high levels. The sharp decline in transaction volumes and newbuilding orders reflects the market’s strategic restraint in the face of record ship prices, long delivery cycles, and fuel technology uncertainty. This supply constraint has become a key determinant of market direction—the combination of zero fleet growth, vessel aging, limited demolition, and inefficient ton-miles has created a structurally tight landscape for the VLCC sector, laying a solid foundation for the year-end market. However, evolving demand patterns and trade dynamics require continued monitoring.
