Midsize crude tanker boom here to stay: Teekay

The changes in crude trade patterns that followed Russia's invasion of Ukraine last year have disproportionately benefited midsize tankers and likely will be long-term, according to Teekay Tankers.

About 90pc of European crude oil imports were on midsize tankers last year, even as the EU began looking farther afield to replace Russian crude, the tanker owner said, leading to a 12pc increase in midsize ton-mile demand for European imports.

Aframax and Suezmax demand last year grew by 12.6pc and 10.7pc, respectively, compared with about 2pc for very large crude carriers (VLCCs), according to data cited by Teekay.

"We think that these trade pattern changes are durable, representing a step change in demand rather than a short-term spike," Teekay chief executive Kevin Mackay said today on an earnings conference call. "The midsize crude tanker trade routes will continue to be stretched into 2023, which will help support strong spot tanker rates."

With longer voyages, fourth-quarter earnings from the company's Aframax/Long Range 2 (LR2) and Suezmax fleets averaged $52,100/d and $56,000/d, respectively. Those elevated earnings have carried into the the new year, with Teekay earnings so far in the first quarter at $67,600/d for Aframaxes/LR2s and for $50,600/d for Suezmaxes, up from $16,200/d and $13,800/d, respectively, in the full first-quarter of 2022.

"The spikes that we're seeing aren't seasonal or short-term sanctions-related," Mackay said. "They're far more durable than that."

With Aframax earnings strong, the company converted several of its LR2 tankers from the clean market to the dirty market, although some could be converted back to clean as rates begin climbing in that market following the EU's 5 February ban on seaborne imports of Russian refined products.

Teekay posted fourth-quarter profit of $146.4mn, compared with a loss of $39.8mn in the fourth quarter of 2021.

By Tray Swanson