Tanker Fleet Growth Threatens Freight Boom, Bullish Secondhand Markets: Analysts

The global tanker fleet is expected to expand 22.6% from 703.72 million deadweight tons at the end of 2025 to 862.98 million dwt in 2029, according to S&P Global Energy CERA's latest fleet outlook. This growth, however, could be undermined by whether demand can absorb the increasing supply, as the critical issue is not just about the supply growth, but whether the ton-mile demand, scrapping, sanctions-related inefficiencies, and operational segmentation can handle the expansion without causing a significant drop in utilization and freight rates.

Tanker rates across segments have surged to record levels since the US-Iran war at the end of February, driven by the need for Asian importers to access barrels from farther away and Middle Eastern producers seeking ship-to-ship transfers to bypass the Strait of Hormuz risks. CERA analysts note that these inefficiencies "cannot be assumed to expand indefinitely," warning that normalizing geopolitical trade patterns, easing sanctions, or the return of restricted ships could lead to a faster rise in effective supply than the headline fleet figures suggest.

The order book, which includes 1,494 tankers totaling 184.10 million dwt, shows that Very Large Crude Carriers and Suezmaxes account for 70.5% of the ordered capacity. Newbuild deliveries project a significant increase in Very Large Crude Carrier and Suezmax capacities, but a more challenging period is anticipated in 2028-2029 due to a surge in VLCC and Suezmax deliveries.

Tanker asset values have seen a five-year-old Very Large Crude Carrier at $185 million, up 57.4% in nine months, and a 10-year-old VLCC at $186 million, up 117% year on year, indicating a sharp increase in ship values compared to newbuilding order prices.