TANKER sale-and-purchase activity has plunged following the start of the crisis in the Middle East, as buyers are faced with freight markets and insurance uncertainties.

The downturn followed heightened levels of tanker sales from the fourth quarter of last year, in particular for crude oil tankers.

“The weeks leading up to the end of February was exceptionally active for tanker sale-and-purchase transactions but since then the picture has changed sharply,” said Xclusiv Shipbrokers analyst Dimitris Roumeliotis.

“Geopolitical shocks since have contributed to a marked slowdown in activity,” added Roumeliotis.

Tanker sales in February reached their highest level in several years, with 66 ships changing hands as sellers capitalised on high asset prices.

This followed a strong January, when Sinokor and MSC Group jointly commenced a very large crude carrier buying spree that saw deals concluded for at least 55 such ships in the past two months alone.      

But following February’s surge in sales the market has dropped markedly, with only a handful of deals being confirmed in the past two weeks.

The few reported sales included the 2009-built, 158,000 dwt, suezmax tanker Libera (IMO: 9446374) which was sold by Italy’s d’Amico to Singapore-based buyers for $44m.

In the aframax sector, Aegean Shipping Management is said to have sold the 2018-built, 112,000 dwt, Green Attitude (IMO: 9808156) to undisclosed buyers for $71m.

Meanwhile, Sea Trade Marine was reported to have sold the 2007-built aframax Volta River (IMO: 9336414) for $33m to undisclosed buyers.

In the medium-range product tanker segment, Norway’s Westfal-Larsen sold the 2009-built Finnanger (IMO: 9387712) and the 2010-built Fjellanger (IMO: 9387724). The 46,000 dwt sister vessels were sold to undisclosed buyers for $48m en bloc.

“Buyers have moved to the sidelines, but not because appetite has disappeared,” said Roumeliotis.  

“Pricing of secondhand tonnage has become extremely difficult to anchor when war risk premia are in flux, insurance cover is being pulled or repriced daily, and the future earnings picture for MEG-exposed tonnage is genuinely uncertain.”

Roumeliotis said the product tanker segment, particularly long range two ships, is facing escalating uncertainty, as two of the world’s most critical shipping corridors have become simultaneously impassable.

Ships are being stranded, insurance coverage is being withdrawn while freight rates are reaching record highs on the limited number of voyages that are still being completed.

Roumeliotis emphasised that as the situation is evolving so rapidly assumptions on where the sale-and-purchase market is heading can quickly become outdated.

“What seems reasonable one day may be completely inconsistent with reality the next, making forecasting particularly challenging,” said Roumeliotis.

Peace deal rebound

If a peace deal is reached in the near term, however, Roumeliotis expects a rebound in the secondhand tanker market.

Once stability returns and crude flows resume, refiners are likely to restock both commercial and strategic inventories, creating pent-up demand.

This restocking would support spot earnings and stimulate sale-and-purchase activity, especially for suezmax tankers, believes Roumeliotis.

A more complex issue lies in the potential reintegration of shadow and restricted fleet vessels.

Replacing Iranian flows with compliant ships alone could require up to 30 VLCCs and 20 suezmaxes, placing additional strain on an already tight spot fleet.

“If the Iranian oil trade normalises under a peace scenario, this process could boost demand for compliant tonnage,” noted Roumeliotis.

And should Iranian exports return fully to mainstream VLCC and suezmax markets, this would also help to offset the effect of a big influx of tanker newbuilding deliveries due this year and in 2027.

Conversely, if the Strait of Hormuz remains closed for an extended period, the secondhand tanker market would likely remain slow, but with limited impact on vessel pricing in the short term, suggests Roumeliotis.

In the short term, modern, fuel-efficient, vessels with flexibility to operate beyond the Middle East Gulf, particularly those able to capture Atlantic Basin or long-haul opportunities, would retain stronger support.

Older or MEG-dependent vessels, by contrast, would face weaker demand due to uncertain employment prospects.

Over time, prolonged disruption would have structural consequences. Lower export volumes from MEG producers would reduce fleet utilisation and soften earnings expectations.

This would place downward pressure on secondhand values, especially for older or less adaptable ships, while modern tonnage would remain relatively more resilient.

“Overall, an extended Hormuz closure would first translate into lower liquidity in the sale-and-purchase market, followed by a more gradual adjustment in asset values, with performance increasingly driven by efficiency, flexibility and trading optionality,” said Roumeliotis.

The MEG crisis is also adding uncertainty for shipowners considering new tanker orders.

“Why commit to a newbuilding with a 2028 delivery at elevated prices when the earnings outlook beyond the current spike is unclear?” argued Roumeliotis.

However, he believes most shipowners will continue to take a long-term view, particularly given that 18% of the active suezmax and VLCC fleet is 20 years old or more.

“The fleet demographic case for long-term investment remains compelling. The current crisis is more likely to delay, rather than cancel out, new orders.”