More than healthy earnings are on the cards for tanker owners in 2024. The latest installment in Maritime CEO’s annual outlook. A potential scrapping of much of the dark fleet, belated ordering en masse, and a highly profitable year. That’s the tanker outlook in the Year of the Dragon without even taking into account the shut-out of the Red Sea. McQuilling’s prevailing view for the crude tanker markets favours mid-sized tankers over VLCCs in 2024 as major VLCC hubs – Middle East and West Africa – reveal tighter crude balances. McQuilling’s base case 2024 TCEs is $45,900 a day for VLCCs, while aframaxes and suezmaxes outperform at $55,000 a day and $50,200 a day respectively, basis eco tankers without scrubbers. McQuilling calculations amid Red Sea developments reveal a negative impact (-$8,300 a day) on VLCC earnings should Saudi Arabia maximise its East-to-West Pipeline throughput, while aframax TCEs may increase by $42,400 a day from the base case. Scheduled newbuilding deliveries in 2024 will hit lows not seen for more than 20 years Turning to product tanker earnings McQuilling projects LR2s to earn $56,500 a day in 2024, basis eco tankers without scrubbers, out-earning MRs by 40% excluding Red Sea impacts. Secondhand values for aframax and LR2 tankers have the most upside over the next two years, McQuilling is forecasting. Red Sea bonus The Middle East continues to be a vital part of the global oil market, both in terms of production from nations in the region, and a bottleneck in global seaborne oil supply chains. By mid-February, roughly one in two tankers on routes between Asia and Europe had opted to give the Houthi missiles a miss, adding significant tonne-miles to a sector that is already running at very high utilisation levels. At 12 knots, the journey time for a Jubail-Rotterdam voyage via the Cape of Good Hope increases by 16 days to around 39 days compared with the same route via the Suez. “This is creating greater fleet inefficiency and that will continue to underpin rates in the short-term until owners and charterers deem that the risk on Red Sea transits has lessened,” broker SSY noted in a recent report. In Clarksons Research’s stretch case scenario, the London broker assumes the disruptions will be ongoing with 90% re-routing on all affected trades and drive 5.5% uplift in global tonne-miles; container and crude to rise 10% and product tankers by 20%, with bulk seeing just 2% uplift. However, Clarksons believes that the tanker segment will see more shifts in trade flows to offset the re-routings. The tanker vessel class most impacted by the Red Sea diversions is suezmax, likely leading to a spike in earnings. However, if the Red Sea crisis is prolonged charterers may well look to parcel two suezmax cargoes onto one VLCC. Diverting via the cape adds about 4,900 nautical miles to the voyage and over two weeks in voyage length. This increases tonne-miles for a single voyage by around 70%, according to Vortexa. Using 2023 data, Vortexa has projected the impact to this vessel class if this rerouting continues. On a monthly basis, tonne-miles for suezmaxes carrying crude from the Middle East to Europe would increase about 130% if transits occur via the cape instead of the Bab el-Mandeb strait. With the incremental increase from the extra tonne-miles for these specific cargoes, monthly global suezmax tonne-miles would increase by around 10%. However, analysts at Gibson warn that at some point charterers will look at the econ