TD7 NWE Aframax: Forties undervalued and tightening tonnage supply heightened by Med fuel oil pull
NWE Aframax vessel supply in the 14-day ahead window stands at 38 ships against a 90-day moving average of 50, the count lengthened this week from just 30 open vessels. The Forties crude RBI sits at -$3.62/bbl, confirming North Sea barrels are undervalued, a bullish cargo demand signal. The freight RBI at -$6.80/mt confirms TD7 rates are undervalued relative to global competition, adding a further supportive signal alongside the crude economics.
The more interesting dynamic shaping NWE Aframax supply today is the potential pull of tonnage toward the Mediterranean. Fuel oil loading demand in the Med could draw Aframaxes away from the NWE list, tightening prompt availability further.
It is an emerging structural displacement flow from Iraq, which is currently trucking approximately 4.5 million barrels of fuel oil per month through Syria to the Baniyas refinery and port on the Mediterranean coast, creating a land-bridge corridor that bypasses the Strait of Hormuz entirely. From Baniyas, that oil is loading onto Aframaxes for global export. This flow is incremental Med Aframax demand that was not present before the conflict.
Fixture activity over the past three days has been thinner than last week but still indicates continued activity. Torm Hilde went on subjects loading Sullom Voe for UKC for a 25 to 27 July laycan and Anwaar Trablus went on subjects loading Whitegate for UKC for a 2 August laycan.
The Med Aframax picture is more nuanced. Rates there remain highly voyage-dependent and charterers could be deliberately holding back enquiry to allow the list to repopulate before covering. The key constraint on Med Aframax upside in the very near-term will likely be Suezmax competition: with Suezmaxes near parity and historically some owners willing to take part-cargoes, they effectively cap the rate ceiling, for now. The Suezmax segment though should soon benefit from increased demand due to re-escalating conflict tailwinds.
For NWE TD7, the picture remains constructive. Supply 12 below average, Forties undervalued, freight undervalued, and Med fuel oil demand drawing tonnage away from the region. The near-term direction is sideways to firmer. Owners should hold current levels and resist discounting.
About the Author
Michael Ryan, our Freight Commodity Owner at Sparta, brings over a decade of experience with Trafigura in the energy sector managing risk across products and regions before becoming Head of Risk for subsidiary Puma Energy. Michael then joined the Trafigura commercial team trading freight while successfully growing the physical fleet through strategic dealmaking.
Connect: LinkedIn / X
About Sparta
Founded in 2020, Sparta made waves in the commodity analytics space in March 2022 when it secured a $6m series A investment from Singular. This success then later snowballed into a further $17.5 million in a series A funding round led by the technology venture capital firm FirstMark, with participation from existing shareholder, Singular.
The platform, created by former traders Miles Moseley and Felipe Elink Schuurman, is designed to answer a common problem shared by most traders: 90% of pricing data required to make trading decisions is kept in silos and shared manually by voice, email, or chat.
Sparta breaks these existing data silos and combines the physical and paper markets to provide traders with live access to global raw prices, from futures and swaps to forward freight and physical premiums. We work with clients globally, including Philips 66, Chevron, Trafigura, Equinor and more.
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