A recent surge in freight rates for tankers transporting oil has led many vessels to transition from carrying refined products to crude. In just the first four days of September, nine long-range-2 (LR2) tankers—typically used for transporting products like jet fuel and diesel—shifted to crude oil transportation, increasing the total number of such switches this year to 35, according to ship-tracking platform Signal Ocean.
This shift within the tanker fleet underscores the effects of heightened oil production by various nations and the repercussions of stricter Western sanctions on Russia and Iran. OPEC+ has escalated output in 2023, as have non-member drillers, resulting in increased crude volumes requiring transportation to global markets. Georgios Sakellariou, a chartering analyst at Signal Maritime, attributes the trend to the lucrative earnings potential for shipping oil, as freight rates escalate.
The benchmark earnings for very-large crude carriers have recently peaked, allowing smaller tankers like Aframaxes to secure significantly higher rates. Currently, Aframax tankers command daily rates of approximately $65,500—a nearly 70% premium over LR2 rates—highlighting the financial advantages of the switch. However, transitioning between transporting dirty crude and clean products incurs costs, as shipowners must invest in new coatings for the tankers.
