According to the report from Gibson Shipbrokers, the expected headlines of 2024, the EU’s Emission Trading System and new OPEC+ supply cuts, were replaced by Houthi attacks on commercial shipping. These attacks led to a significant rerouting of vessels from the Suez Canal to the Cape of Good Hope, creating turbulence in the tanker market. Despite international efforts, the crisis remains unresolved.

The tanker market saw minimal rate impacts in late 2023, but the first quarter of 2024 experienced a considerable tightening in clean markets, particularly affecting LR2 rates, which surged in January and remained elevated but volatile throughout the first half of the year. VLCC utilization also increased as charterers rerouted cargoes around the Red Sea, though average rates were moderate despite a spike in May.

The EU’s Emission Trading System, extended in January 2024 to include large ships entering EU ports, had minimal immediate impact on tanker markets, though compliance costs are expected to rise over time.

In Panama, increasing water levels eased transit restrictions in the first half of 2024, normalizing trade from the US Gulf. With the ongoing war in Ukraine and the Red Sea increasingly closed to shipping, the second half of 2024 is expected to remain volatile, influenced by a strong hurricane season and geopolitical uncertainties.