Brief: Tanker Rates & Tariffs to Support US Energy Exports

US Sanctions on Russian tankers elevates Asia's competition for Middle Eastern crude supplies with knock-on effects for US energy exports as Trump tariffs inch closer

January 16, 2025 • Est. Reading Time: 3 minutes

Mobius Intel Brief:

Feb ‘25 TD3C (Middle East to China VLCC) tanker rates jumped nearly 44% from Jan 6 to Jan 15 after the latest round of US sanctions on Russian tankers forced Asian buyers to compete for alternative cargoes from the Middle East.

Key Intel

  • Competition for crude shipments from the Middle East raised rates for February cargoes on MidEast-to-China Very Large Crude Carriers (VLCCs) to an intra-week high of $15.14/metric ton ($4.09 million) yesterday before settling today at $14.24/ton ($3.84mm).

  • Asia’s demand for non-Russian crude shipments and the imminent arrival of President-elect Trump invites knock-on effects for US energy exports. As observed during the first Trump administration, tariff threats against trade partners with an outsized surplus against the United States will likely incentivize balance-narrowing purchases of US crude, products, and LNG.

  • Asia hosts five of the top seven countries with the largest 3Q24 trade surpluses against the United States. As shown in the chart below, China, Vietnam, Taiwan, Japan, and South Korea posted a combined $152 billion surplus against the United States in the third quarter of last year.

  • In line with this theme, South Korean Minister of Trade Ahn Duk-geun told the media today that officials will likely import more US energy supplies to ease a growing deficit as the trump administration takes office.

Looking Ahead

Countries in Asia and the European Union are likely sources of incremental demand growth for US energy exports as the second Trump administration takes office and begins evaluating trade balances next week. These incentives will likely be supported by increased competition for non-Russian crude supplies via the Middle East after last Friday’s sanctions announcement.

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