Atlantic basin VLCC market report

The Hormuz crisis has fundamentally redirected global crude flows. With Philip Jones-Lux noting today that over 6 million b/d of AG production is shut in, Asian refiners are turning to the Atlantic Basin for replacement barrels. ECSAM and USGC are two primary beneficiaries of that substitution, and both markets are presenting strongly bullish signals.

ECSAM VLCC vessel supply in the 14-day ahead window stands at just 1 ship against a 90-day moving average of 6: the tightest supply reading across any VLCC market today. The Tupi crude RBI (Relative Basket Index) sits at -$10.56/bbl, confirming Brazilian crude is highly competitive on a Far East delivered basis. Tupi is among the closest substitute grades to the medium-gravity AG slates that Far East refiners are configured to run, and the depth of the RBI signal confirms the arb economics strongly favour loading from Brazil. The freight RBI is the most deeply undervalued reading across any VLCC route today, making ECSAM the standout ship owner opportunity in the dirty tanker market.

Fixture activity over the past seven days reflects the growing Brazil to East flow. Lita was placed on subs loading Brazil for East for a 13 April laycan, and Aristotelis II was fully fixed at WS 230 for a 2 April laycan. Front Orkla and Gassan followed fully fixed to Qingdao at WS 164 and WS 173 respectively. The step-down in rates across the week reflects the broader market correction, but with only 1 vessel in the 14-day window the sell-off looks overdone.

USGC VLCC supply stands at 2 ships against a 90-day moving average of 3, also below average and modestly supportive of owners. The TD22 WTI RBI sits at -$10.48/bbl, indicating USGC crude is structurally cheap into the Far East. The negative freight RBI confirms TD22 freight is also materially undervalued.

Fixture activity over the past seven days on TD22 confirms the demand is building. Atrebates was placed on subs loading USG for Ningbo at $20.88m lumpsum, Aslaf was fully fixed USG to East at $19.75m lumpsum, and Horaisan and Towa Maru were both fixed USG to Japan for 18-20 April laycans. The consistency of Japan and China-bound cargoes reflects systematic Asian restocking as AG supply remains impaired with no near-term resolution in sight.

With all three signals bullish across both routes; the structural case for Atlantic Basin VLCCs is strong. ECSAM presents the more extreme supply tightness and deeper freight undervaluation, but both markets offer owners a compelling opportunity. Charterers should act promptly on both routes.