Tanker values rising, but demand for older vessels falling
The geopolitical conflict in Europe caused serious shifts in the oil market. As a result, many private companies, whose owners could not always be traced, began actively buying up old tankers. However, the situation has changed, demand has stabilised, and business has focused on transport safety. As a result, tankers with a long service life have fallen in value.
Sanctions imposed on Europe’s largest oil exporter have led to the emergence of anonymous buyers who do not wish to disclose their details. In the first six months of 2023, their market share was almost 54% of all sales. In addition, many of them used old tankers, the cost of which has risen significantly, to transport raw materials. The situation has changed since the second half of last year, and the number of long-life vessels has decreased. While the average age of tankers was 18 years in February 2023, it had fallen to 15 years by August.
According to Rebecca Galanopoulos of VesselsValue, this trend is due to the desire to reduce the risks associated with older vessels. In addition, buyers are now focusing more on smaller tonnage tankers as they are more attractive from an investment point of view.
A major factor in the decline in demand for older vessels was the fire on the Aframax Pablo, launched in 1997. This made many buyers think about the safety of shipping.
Tanker price dynamics
Demand for tankers has driven up their prices to the highest level in 15 years. The price increase mainly affected vessels such as VLCCs and Aframaxes. For Aframax, the market situation was as follows:
- Since June 2023, the value of the 15-year-old Aframax has risen by around 5.4% in just a few months. The rise was from USD 39.4 million to USD 41.3 million. This was a record high since autumn 2008.
- In the first six months of 2023, the number of transactions involving tankers of this type increased by 5% compared with the figures for 2022. One of the most significant sales was a USD 31 million deal for a vessel built in 2004. It’s deadweight tonnage is more than 105 thousand tonnes.
VLCC tanker value declines sharply from the second half of 2023:
- Since the third quarter, the price of vessels around 20 years old has fallen by around 6.9% to just over USD 41 million.
- Tanker sales volumes were down 36% compared to the same period in 2022.
- The significant sale in the VLCC sector was a tanker valued at USD 42.5 million. It was built in 2003 and has a deadweight of 316.5 thousand tonnes.
Regarding general market trends, buyers are looking for options with a service life of no more than 15 years, increasing the cost of such tankers.
