The crude tanker orderbook last month reached a nine-year high relative to the existing fleet, but the outlook for future fleet growth is clouded by questions around recycling of older sanctioned and shadow fleet tankers.
The order book-to-fleet ratio for crude tankers ended October at 14.1pc, the highest since 2016, according to shipping association Bimco. Recycling of older ships is crucial to balanced supply, and with 18.2pc of the fleet 20 years or older, the recycling potential is larger than the orderbook, according to Bimco. Vessels older than 20 years often face age restrictions from large international charterers, according to shipbroker BRS.
However, 7.9pc of the recycling potential for the global crude tanker fleet comes from vessels sanctioned by the UK, US or EU, which restricts their sale and further delays recycling, Bimco chief shipping analyst Niels Rasmussen told Argus.
Crude tanker demolitions remain low, especially for very large crude carriers (VLCCs), which have not had a confirmed demolition since 2022, according to BRS. This lack of demolitions reflects demand for so-called "shadow" fleet vessels engaged in oil trade of dubious legality. Generally, earnings for mainstream VLCCs since the second half of 2022 have also helped keep VLCCs away from the demolition yard, said the shipbroker.
Time charter equivalent earnings (TCE) for VLCCs loading out of Saudi Arabia into China have averaged $47,248/d so far in 2025, up by $28,380/d from their 2022 average, according to Argus data. For US Gulf loading VLCCs into China, TCEs in 2025 averaged $42,835/d, up by $59,615/d from negative levels in 2022.
"We understand that five VLCCs have recently been sold for demolition recently," the shipbroker said. "However, we would be unsurprised if these ships would eventually end up in the [shadow] fleet rather than at a breaker's yard."
