Don't waste a good crisis: VLCCs upgraded to "strategic assets", crude oil restocking demand "delayed but arriving"

I. What Happened? — VLCC Freight Rate Center Rebalancing, Crude Oil Inventory Levels Approaching Historic Lows

The blockade of the Strait of Hormuz—a global oil artery—has entered its ninth week, and the sentiment in the capital market is shifting from a "panic premium" to a mean reversion of "rational value reassessment."

1. The Rebalancing of Freight Rate Centers: A Return from "Sentiment Market" to "Fundamentals"

According to the latest monitoring data (as of April 30), although VLCC TCE has recently declined, it remains at highly competitive levels. The Atlantic route is steady at $90,000-$100,000 per day, while TC34 (Oman-China)—now the new pricing anchor after the Persian Gulf benchmark disruption—remains at around $120,000 per day. This decline is not due to shrinking demand but rather the market having previously priced in "unlimited voyage stoppages" out of panic and now moving into a phase where the pace of cargoes in transit reaching their destination is being precisely calculated.

The main reasons for the recent TCE drop include: First, a temporary supply-demand mismatch. The cargo growth in major loading areas such as the US Gulf and Brazil has been relatively limited, but a large number of empty vessels had previously poured into the Atlantic market, resulting in a temporary surplus of regional shipping capacity. Secondly, due to the extension of waiver policies on sanctioned oil exports, compliance market demand is being diverted. India continues to purchase large volumes of Russian crude, while China maintains imports from Iran; both these trade flows bypass the mainstream VLCC market, weakening the demand for compliant shipping capacity.

2. OECD Crude Oil Inventory Levels Are Approaching Historic Lows Since 2022:

Global oil inventory levels are key to understanding the explosive potential of the VLCC market after resumption of shipments.

With the Strait of Hormuz blockade causing a sharp reduction of 14.5 million barrels per day in Persian Gulf oil production, impacting nearly 15% of global energy supply, the initial buffer built via releases from Strategic Petroleum Reserves (SPR) and en route oil shipped before March was largely depleted by mid-April. This directly triggered a record drop in global inventories in April, falling by 11 to 12 million barrels per day, rapidly pushing OECD crude oil inventories close to historical lows not seen since 2022.

......