Clarksons Securities believes VLCC spot rates have much further to rise after storming past $100,000 per day for scrubber-fitted ships. Analysts Frode Morkedal and Even Kolsgaard believe fourth quarter vessel earnings could be the best for owners of big tankers since the second three months of 2020. The average rate then was $77,000 per day.

Listed shipowners have been reporting VLCC bookings for October, November and December $60,000 per day on average so far in the final three months. In October, Clarksons Securities had predicted VLCC rates would burst past $100,000. This happened by early November. Older vessels are earning $80,000 per day in the spot market.

“We believe that the tanker market’s capacity utilization rate is between 91% and 92%,” Morkedal and Kolsgaard said. They argue that a rise of just 2% in demand can hike VLCC earnings to $150,000 per day. This demand increase will be realized if the European Union’s seaborne crude oil imports from Russia of 0.75m barrels per day in October are moved on to longer hauls due to the impending ban, the analysts said.

“Although equities have performed well this year, we estimate that tanker equities do not price in more than $40,000 per day, and hence capture little to none of today’s strong rates,” they added.

The record-low orderbook, which implies essentially zero fleet expansion from 2024, still supports investment in tanker shares, the duo said.

“Despite oil prices nearing $100 per barrel, refinery margins have rarely been higher. This suggests that activity in the tanker market can remain solid even if the economy softens,” Morkedal and Kolsgaard concluded.

Energy Scan reported European gas consumption in October dropped 22% year-on-year, due to warmer-than-average temperatures. Fearnley Securities argues that for tankers, lower LNG demand probably means less gas-to-crude oil switching than previously assumed.