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BIMCO: As oil prices plummet, crude oil tanker time charter rates skyrocket

‘While other shipping markets instantly suffer from the fallout of the coronavirus crisis, the crude oil tanker market has yet to feel the same pain,’ says Chief Shipping Analyst.

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BIMCO Crude oil tanker TC rates

Peter Sand, Chief Shipping Analyst at BIMCO, on Thursday (2 April) published an analysis on the impact of the current oil demand and supply imbalance on the shipping industry as economies go into lockdown to curb the COVID-19 pandemic: 

Overview

Geopolitics is the dominating variable in the tanker market these days. With the OPEC+ negotiations falling apart and Saudi Arabia initiating an oil price war, the crude oil tanker spot freight rates, and time charter (TC) rates have soared.

As the outbreak of the coronavirus continues to drag on economic growth, and particularly dampen demand for oil products, the medium-term outlook remains gloomy.

“The outbreak of the coronavirus has impaired major economies around the world and slowed down demand for oil products. The oil price war is temporarily offsetting this slowdown of crude oil tanker demand, but this will only underpin the market for so long, and the outlook is not shaping up positively in the medium-term,” says BIMCO’s Chief Shipping Analyst, Peter Sand.

On 31 January, the US government removed sanctions on a large Chinese tanker entity which, among other geopolitical factors, had lifted the market in Q4 2019. The lifting of sanctions, coupled with the implications of the coronavirus, quickly added downward pressure to the rates. Yet, the breakdown of the OPEC+ alliance and subsequent outbreak of an oil price war in early March, led to a spectacular U-turn for the spot freight and TC rates.

This unforeseen shock sends rates soaring – again

Time charter rates had gradually increased from the lows of 2018, until geopolitics kicked in during September 2019, which inflated rates into extremely profitable territory. Rates remained high for the remainder of Q4, but eventually fell as the elevated rates were not supported by market fundamentals and the transitory effects evaporated. This is once again the case with the breakdown of the OPEC+ alliance lifting rates despite otherwise poor market fundamentals i.e. fleet overcapacity. On 27 March 2020, the 1-year TC rate for a VLCC reached USD 58,750 per day. BIMCO expects this level to fall as geopolitics eventually ease and the fundamentally lower oil demand takes hold.

While most of the crude oil transports are fixed in the volatile spot freight market, the 1-year TC market is more stable and serves as a proxy for the medium-term outlook. However, given the nature of the spike, freight rates are not expected to remain elevated for the rest of 2020 and shipowners are therefore keen to fix their ships at current rates.

Fixing now is risk management. The current quote for a 3-year TC of a VLCC is USD 36,250 per day, the highest since May 2016, apart from two outlying weeks in mid-October 2019.

As oil prices have plummeted, with Brent crude reaching 18-year lows, the prices for low-sulphur bunker fuels have followed along the same trajectory. The narrowed low-sulphur to high-sulphur spread has diminished the upside of a scrubber. The premium for a scrubber-fitted VLCC on a 1-year TC has been cut in half from USD 10,000 per day on 10 January to USD 5,000 per day on 27 March 2020.

The market is being flooded with oil, creating opportunities for storage on VLCCs

The heightened output from Saudi Arabia in April is set to flood the market with crude oil at a time when there is no such need on the consumption side, which consequently will lead to the build-up of inventory.

Liquid fuels production and consumption will be imbalanced during much of 2020 with total production estimated at 102.2 million barrels per day (m bpd) in Q2 compared to estimated consumption of 100.3m bpd (source: US EIA). This implies inventory building of 1.9m bpd. Most of it is set to take place in April for as long Saudi Arabia keeps production elevated.

We are heading for a period of massive supply-demand imbalance, where the oil supply is high, but major economies are in lockdown. With land-based oil storage potentially approaching full capacity fast, it is limited how much additional oil can be imported. Risk-loving oil traders may look to time charter VLCCs for floating storage. Such actions will extend the time of elevated freight rates.

”In recent years, the oil tanker market has, to a large extent, been driven by external factors. While other shipping markets instantly suffer from the fallout of the coronavirus crisis, the crude oil tanker market has yet to feel the same pain, thanks to the massive fall in oil prices, reflecting yet another external factor,” says Peter Sand.


Photo credit and source: BIMCO
Published: 3 April, 2020

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Legal

Singapore police arrest eight over alleged illegal MGO transaction off Tuas

SPF says preliminary investigations found that crew members of a Singapore-registered tugboat misappropriated MGO worth about SGD 10,570 without their company’s knowledge and sold it illegally.

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Singapore police arrest eight over alleged illegal MGO transaction off Tuas

The Singapore Police Force (SPF) on Thursday (13 August) said it has arrested eight men, aged between 25 and 54, for their suspected involvement in an illegal transaction of Marine Gas Oil (MGO).

On 13 August 2026 at about 1.05am, officers from the Police Coast Guard (PCG) conducted a check on a Singapore-registered tugboat in the waters off Tuas and discovered that eight crew members were possibly involved in the illegal transaction of MGO. 

“Preliminary investigations revealed that the crew members of the tugboats misappropriated MGO valued at about SGD 10,570 (USD 8,258), without their company’s knowledge,” SPF said in a statement.

“The MGO was sold illegally for their personal financial gain.”

The eight crew members will be charged in court on 14 August 2026 with the offence of theft by servant of property in possession of master under Section 381 of the Penal Code 1871 If convicted, they shall be punished with an imprisonment term that may extend to seven years and shall also be liable to fine.

“The Police take a serious view of illegal transaction of MGO in Singapore Territorial Waters and will continue to conduct enforcement and security checks to prevent, deter and detect such illicit activities in Singapore waters,” SPF added. 

 

Photo credit: Singapore Police Force
Published: 14 August, 2026

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Port & Regulatory

Gard: Sulphur-related bunker claims rise amid tighter China MSA enforcement

Claims involving excessive sulphur content in marine fuels have been rising, while stricter inspections by the China MSA have heightened the focus on sulphur compliance, particularly in the Bohai Sea.

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shraga kopstein on Unsplash

Maritime protection and indemnity (P&I) club Gard on Wednesday (12 August) highlighted that claims involving excessive sulphur content in marine fuels have been rising, while stricter inspections by the China MSA have heightened the focus on sulphur compliance, particularly in the Bohai Sea:

Rise in off-spec sulphur claims

Recent claims experience indicates that bunker quality continues to pose a significant operational risk for shipowners. In our earlier review of bunker-related claims during the first five months of 2026, we highlighted a rise in off-specification bunker incidents amid increased pressure on global fuel supply chains following the escalation of the conflict in the Middle East. 

Specifically for Sulphur compliance, between January and June 2026, the number of sulphur-related cases increased by more than threefold compared with the same period in 2025. Notably, the number of cases recorded in the first six months of this year has already exceeded the total number reported during the whole of last year by approximately 40%. 

While each case is fact-specific, the increase is notable because excessive sulphur content constitutes a MARPOL compliance issue. Unlike many other bunker quality problems, sulphur non-compliance identified through port state inspections can result in vessel delays, enforcement action, and substantial costs associated with debunkering and fuel disposal. 

The map below illustrates the geographical distribution of sulphur-related claims recorded during the first six months of 2026, based on the location where the bunkers were stemmed.

Distribution of sulphur related claims

China MSA steps up sulphur compliance enforcement

According to our correspondent, Huatai, on 5 June 2026, the maritime authorities of Tianjin, Hebei, Liaoning and Shandong jointly launched a special campaign on ship pollution prevention and control in the Bohai Sea region. The campaign involves coordinated supervision by local MSA branches across the region and is expected to last nearly five months. It covers major ports and surrounding port areas in the Bohai Sea region, including Tianjin, Tangshan, Qinhuangdao, Huanghua, Jinzhou, Yingkou and Longkou. 

While the initiative is broader than bunker sulphur compliance alone, its scope includes inspections relating to air pollution prevention, SOx emissions, fuel compliance and other high-pollution-risk operations. Enforcement measures are expected to comprise onboard inspections, cross-regional enforcement activities, unannounced spot checks and remote monitoring. These efforts will be supported by a combination of UAV patrols, maritime patrol vessels, shore-based monitoring systems and rapid on-site fuel testing. 

As a result, vessels trading in the Bohai Sea region may experience increased scrutiny of fuel compliance documentation, fuel sampling records, onboard fuel management procedures, and the handling or disposal of suspected non-compliant fuel.

Documents typically requested by China MSA

Based on our recent experience, including the case discussed above, and subject to the specific requirements of the local MSA office, owners and operators may be requested to provide supporting documentation such as: 

  • Bunker documentation – Bunker Delivery Notes (BDNs), MARPOL fuel sample records, fuel test reports, and relevant fuel quality certificates. 
  • Statutory certificates – including the International Air Pollution Prevention (IAPP) Certificate and International Oil Pollution Prevention (IOPP) Certificate. 
  • Operational records – engine logbooks, deck and navigation logbooks, Oil Record Book entries, and records relating to fuel transfers, storage and consumption. 
  • Sampling documentation – the Master’s statement and any records demonstrating how fuel samples were drawn, sealed, labelled, handled and retained. 
  • Correspondence records – communications with the authorities, bunker suppliers, charterers and other relevant stakeholders. 
  • Fuel disposal records – approved disposal plans, debunkering documentation, receipts and evidence of final disposal, where applicable. 

The exact documentation required will depend on the nature of the investigation, the findings of the inspection, and the requirements of the local enforcement authority. 

Possible regulatory consequences in China

Under the Air Pollution Prevention and Control Law of the People’s Republic of China, ocean-going vessels are required to use fuel oil meeting atmospheric pollutant control requirements after berthing. Vessels operating within designated emission control areas must also comply with applicable emission standards. Article 106 provides that where vessel fuel oil fails to meet applicable standards or requirements, the competent maritime authorities may impose fines ranging from RMB 10,000 to RMB 100,000. Liability may extend to shipowners, ship operators and ship managers depending upon the circumstances of the case. 

Recommendation

Sulphur compliance should be treated as both a fuel quality and regulatory risk. Owners and operators are encouraged to take preventive steps before bunkering, act promptly if non-compliant fuel is suspected, and preserve evidence carefully if an inspection or claim arises. Under amended 

Resolution A.1206(34), Appendix 18, 2.1.5, if the BDN shows compliant fuel, but the master has independent test results of the fuel oil sample taken by the ship during the bunkering which indicates non-compliance, the master may document this by notifying the ship’s flag Administration, with copies to: 

  • the competent authority of the relevant port of destination, 
  • the Administration under whose jurisdiction the bunker deliverer is located, 
  • and to the bunker deliverer.

 

Photo credit: shraga kopstein on Unsplash / Gard
Published: 14 August, 2026

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LNG Bunkering

Shell expands LNG bunkering footprint in Spain with Valencia

As one of the region’s key maritime hubs, the company said Valencia expands the options available to shipowners seeking LNG supply along major shipping routes.

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Shell expands LNG bunkering footprint in Spain with Valencia

British oil giant Shell on Thursday (13 August) said Valencia has joined its growing network of bunkering locations, making LNG available as a marine fuel.

The successful completion of the first LNG bunkering operation in Valencia marked an important milestone for Spain and further strengthened Shell’s LNG supply capabilities across the Mediterranean. 

In a video shared by the company, bunkering vessel Alice Consulich was shown supplying an undisclosed volume of LNG to the container ship MSC Sabrina.

“As one of the region’s key maritime hubs, Valencia expands the options available to shipowners seeking LNG supply along major shipping routes,” Shell said in a social media post. 

Shell said the achievement reflected the strong collaboration across the maritime value chain, including MSC Mediterranean Shipping Company, the Port of Valencia and Fratelli Cosulich Group.

“We look forward to making more LNG bunker deliveries in Valencia and across the Mediterranean as LNG infrastructure and capabilities continue to expand,” the company said. 

 

Photo credit: Shell
Published: 14 August, 2026

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