Heidmar CEO sees product tanker freight lag refining margins

Heidmar Maritime Holdings Corp. CEO Pankaj Khanna discussed product tanker freight rates and refining margins on September 15 during a forum in London. According to Khanna, strong refining margins have faded as Persian Gulf refined product exports collapsed, making ton-miles insufficient to compensate. In 2025, refined product exports from the Persian Gulf were about 4.1 million barrels per day (b/d) and dropped to 2 million b/d in August, according to S&P Global commodities data.

As a result, refining margins have surged, with the Forties Northwest Europe Cracking Netback Margin reaching $32.18/b in September, a 166% increase from February. Global refining margins remain robust due to limited spare refining capacity and high product prices, noted S&P Global CERA analysts.

Khanna explained that the product tanker fleet could expand by 30%, but without scrapping, this expansion won't be absorbed by ton-mile growth. Fleet additions are expected from 2028 to 2030, yet even with industry-wide production increases, the market can only accommodate an 8% to 10% ton-mile improvement, far from the anticipated 30% fleet expansion.

Canadian crude displacing US imports doesn't automatically result in new seaborne volumes, Khanna emphasized. Strait of Hormuz disruptions easing in the fourth quarter could reduce crude tanker demand by 10.5% to 12.5% in 2026 but boost 17%-19.5% in 2027. However, the crude tanker fleet is projected to grow 9.6% between the end of 2025 and 2027, with LR2 ships making up more than half of the new orders.