Recent VLCC freight rates have shown a strong upward trend, with time charter sentiment surpassing spot rates. The Middle East route has outperformed the US Gulf/West Africa routes, and the TCE spread between large and small vessels has reached a near five-year high. During the Spring Festival period, the tanker sector attracted significant attention as freight rates repeated the sharp increases seen during the 2021 and 2024 holiday seasons. As of February 23, the benchmark VLCC TD3C Middle East-China spot rate recorded by the Baltic Exchange reached $176,000 per day, a 44% surge from the $122,000 per day level observed before the holiday on February 13, marking the highest rate since April 24, 2020.

Fundamental drivers behind the increase include seasonally stronger Middle East shipments, Venezuelan demand absorbing vessel capacity, and rising cumulative imports by China and India. Based on a four-week moving average up to February 22, OPEC seaborne crude exports hit a multi-year high, supporting VLCC demand. Shipments to India showed a notable increase, reaching 2.76 million barrels per day, up 19% year-on-year from 2.31 million barrels per day. Exports from Latin America and West Africa, other key regions for VLCCs, also remained elevated. Correspondingly, imports by China and India reflected the active export pace from major loading regions. Notably, Venezuelan crude exports increased significantly following US involvement, and as legal export volumes were released—supported by rising inventories in transit—this provided additional transportation opportunities for VLCCs.

Inadequate supply of compliant vessel capacity has further amplified rate elasticity, with geopolitical tensions involving Iran adding supportive sentiment. As of February 20, the VLCC vessel-to-cargo ratio stood at 1.17, indicating relatively tight availability of regional tonnage. Combined demand and supply pressures have led to stronger rate volatility, particularly as charterers show heightened preference for compliant vessels. Rising US-Iran tensions during the Spring Festival provided additional market sentiment, with Iran's military exercises in the Strait of Hormuz bolstering shipowners' pricing confidence. This has shifted bargaining power toward shipowners, prompting charterers to secure tonnage earlier.

A major shift in industry structure is underway, driven by Sinokor's acquisition of a large number of VLCCs, which is increasing market concentration and reinforcing shipowners' pricing confidence. This unexpectedly large-scale acquisition reflects a structural reset in the tanker market's supply side. The substantial market share involved is expected to influence VLCC pricing power. Against a backdrop of geopolitical instability and sanctions, global oil trade routes are adjusting, and compliant vessel supply is tightening. The acquisition signals optimism about VLCC's future prospects, further strengthening shipowners' resolve to maintain higher rates.

Looking ahead, in the short term, persistently high freight rates may force charterers to slow shipment schedules, potentially leading to a temporary pullback after recent peaks. The evolving US-Iran situation introduces uncertainty, and as shipment pacing moderates, a correction from current highs is possible. Rates are expected to remain volatile in the near term, with high fluctuations being typical during periods of geopolitical risk.

For the full-year outlook, the view remains consistent with the annual shipping report released on December 8, 2025, which anticipated a recovery in large crude carrier rates. Freight rate movements will continue to follow seasonal patterns, with the first and fourth quarters typically offering favorable windows for increases. The extent of these increases will depend on supply elasticity. With sanctions-related risks persisting into next year, demand for compliant tonnage will remain constrained, providing carriers greater room for rate hikes, especially on long-haul routes from the Atlantic to Asia. However, considering growing new vessel deliveries and a potential slowdown after inventory builds, the upward momentum for freight rates in 2026 may moderate. The market is expected to maintain a neutral-to-optimistic stance for the year.