In February, spot freight rates on all segments of the tanker market registered gains. In the dirty tanker market, VLCC spot freight rates increased 29%, Suezmax 16% and Aframax edged up 5% respectively compared to previous month. In the clean tanker market, East of Suez spot freight rates declined 4%, while West of Suez increased 2% from the previous month. Bunker prices, weather conditions and long haul demand backed the gain in dirty spot freight rates while lower activities on products trade in the east, long haul demand as well as uncertainty in Mediterranean were behind the mix results in clean spot freight rates.
VLCC spot freight rates experienced high gains in all reported routes. Spot freight rates for VLCC operating the Middle East/East route increased by 40% in February, compared to the previous month. During the same period, VLCC spot freight rates for tanker operating the Middle East/West and West Africa/East increased by 31% and 16% respectively.
The experienced healthy increase of spot freight rates in the Middle East/East route was mainly due to higher bunker prices combined with increased tonnage demand from East Asia as charterers rush back to the market after the Lunar New Year holiday. The strong gain in the Middle East/West spot freight rates was supported by long haul tonnage demand as well as insurance costs due to piracy in the Gulf of Aden. Additionally, the increase of floating storage further supported rates and reduced availability. VLCC spot freight rates for tankers operating the West Africa/East route were supported by the higher fuel oil price and tonnage demand from Asia. The lower gains for West Africa/East spot freight rates compared to VLCC rates from the Middle East can be partially attributed to the lower purchases of West African grades by Asian buyers in February compared to the previous month.
Suezmax spot freight rates went through similar developments in VLCC rates. On average, Suezmax spot freight rates increased by 16% in February from the previous month on all reported routes. From West Africa to the US, spot freight rates increased by 20% in February. Rates were supported by higher fixtures and split cargos by charters as result of tight VLCC tonnage availability. Northwest Europe to US East Coast/US Gulf Coast spot freight rates gained 13% in February, supported by an ice premium due to adverse weather conditions in the Baltic and tonnage demand. The higher export of crude oil from Brazil to East also lent support to Suezmax spot freight rates in February.
On average, Aframax spot freight rates edged up by 5% in February compared to the previous month. Spot freight rates for tankers operating the Indonesia/East route edged by 2% in February compared to the previous month. In the same period, spot freight rates in inter-Mediterranean and on Mediterranean/Northwest Europe routes increased by 32% and 20% respectively. The modest gain in spot freight rates on the Indonesia to East route was due to refinery shutdowns while the strong gain on the Mediterranean to Mediterranean and Northwest Europe routes was supported by the weather conditions in the Bosporus as well as the increase insurance of risk aversion in Mediterranean basin due to the political situation. Compared to the previous month, Aframax spot freight rates for tankers operating the Caribbean/US East Coast route decreased by 21% as result of refinery maintenance in the US. The only route exhibiting declines in spot freight rates in February was Aframax Caribbean/US East Coast.