The 1990-1995 Tanker Market at a Glance

by Marsoft, Inc.

After a prolonged downturn that started in 1991, the tanker market experienced a reversal of fortunes in 1995. A combination of slightly higher demand and a noticeable shrinkage of the overall fleet laid the groundwork for the tanker market’s recovery. This took place mainly in late 1994 and early 1995, when scrapping greatly exceeded deliveries. For 1994 and 1995, tanker removals exceeded additions by 5.23 million dwt (27.42 million dwt vs. 22.19 million dwt). In the second half of 1995, OPEC oil production rose taking advantage of maintenance cutbacks in the North Sea and hurricane damage to Mexican oil facilities. Combined with the reduced fleet size, this was the catalyst that sent VLCC spot rates soaring to WS 65 – equivalent to earnings of nearly $30,000 per day for a modern vessel. VLCC time charter rates also climbed sharply in the second half of the year, as did Suezmax rates. Meanwhile, Aframax rates, as well as product tanker rates, rose steadily throughout the year. Even with these increases, however, most rates remained below their 1990-91 peaks.

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