Earnings thrive in volatile beginning to 2025

This month, the tanker market experienced significant volatility, driven by tariff announcements, new sanctions on tankers transporting Iranian and Russian crude, and broader geopolitical disruptions. These events have pushed crude tanker earnings – led by the VLCC segment – to more than $40,000 per day, up 50% since the start of the year.

Uncertain times benefit tanker market – up to a point
While US tariffs and sanctions under President Trump create geopolitical uncertainty, they are helpful to the tanker market. Tariffs on Mexico and Canada were initially announced but later delayed, along with immediate tariffs on China, and are expected to increase sailing distances, boosting crude tanker earnings – as long as a full-scale trade war is avoided.

Longer distances, lower supply driving the boost
Additionally, the US has intensified its “maximum pressure” strategy on Iran, aiming to eliminate Iranian crude exports to curb its nuclear program. With China importing 1.7 mbpd of Iranian crude, these volumes need to be sourced from the Middle East and Atlantic Basin, further increasing sailing distances. China’s Iranian crude imports have already dropped by 400,000 bpd this year, while Brazil and West Africa (Nigeria) have increased exports to China, reflecting this shift.

Looking ahead, geopolitical uncertainty and macro trends suggest continued strength in crude tanker earnings, further supported by limited new vessel deliveries and rising demand for compliant tankers in a tightening market.