The global bulk crude tanker market is on an upward trajectory, propelled by soaring demand that is anticipated to persist throughout 2023. Industry experts are steadfast in their predictions of sustained growth and stability. Nevertheless, there could be a subtle easing in 2024 as the market readjusts and the world's appetite for oil finds a steadier rhythm.The bulk crude tanker market, a vital cog in the world's energy transport infrastructure, has been experiencing a remarkable resurgence after grappling with challenges and uncertainties over the past decade. According to Rajesh Verma, lead bulk researcher at Drewry, a convergence of factors, including increased demand for oil and petroleum products, a recovering global economy, and evolving trade patterns, has created a favourable environment for the sector.“Crude tanker earnings have surged higher over the past year, making it an extremely rewarding year for the sector,” he said. “While a variety of reasons exist for the current situation, the primary reason for the surge in freight rates has been the demand growth and the shift in trade patterns.”Increase in oil demandVerma said oil demand had increased by 2.5% last year. An increase in refinery throughput of 2.4% was also recorded. “The majority of the crude oil demand was in Europe and the US. With an increase of some 4% in the demand for crude oil trade, there was subsequently a strong demand for oil tankers.”Verma added that on the back of this increase in demand, the second positive contributor to the current positive market was the changing trade pattern. “The ongoing war between Russia and Ukraine has seen the European Union (EU) gradually shun Russian crude oil exports. This has resulted in a sharp decline in crude oil imports in Europe from Russia. By December last year, most of the seaborne crude oil imports from Russia to Europe had been halted.”Shift in trade pattern According to Verma, this has seen Russia change tactics and most of its crude oil is now going to the East, mostly China and India. “This shift in the trade pattern has had a huge impact on the tanker market as the haul length from Russia to Asia is very different to that of Russia to Europe, meaning demand for tankers has increased significantly.”He said EU sanctions on Russian oil had mostly benefited the mid-size tanker range, with rates surging and crude tanker earnings escalating.“The surge in freight rates for mid-size tankers is directly because of the robust growth and the shifting trade pattern,” he said. “In 2022, the surge in refinery throughput was primarily driven by the United States and Europe, where there was a notable uptick in demand. In stark contrast, China experienced a sharp decline in refinery throughput during the same period. As the United States and Europe serve as the main discharge hubs for mid-size tankers, the increased demand for refinery throughput in these regions has led to a pronounced upswing in tonnage demand for mid-size tankers, further intensifying the surge in freight rates.”With the majority of Chinese imports being long-haul in nature, it led to reduced demand for Very Large Crude Carriers (VLCCs), a trend that is mirrored in the shipping rates. On the other hand, the EU was increasingly purchasing crude oil from Africa, the US and the Middle East – all routes that predominantly used mid-size vessels.Verma, however, warned that while demand for mid-size tankers would continue to be high throughout 2023 along with the rates, this would soften in 2024.Resurgence in Chinese demand“In the second half of the year, one of the most significant developments in the global crude tanker market will be the resurgence of Chinese demand, a trend that is already taking shape. Refinery throughput in China has seen a remarkable upswing, promising substantial benefits for VLCCs. Notably, approximately 80% of China's imports are carried out using large crude carriers, further bolstering the demand for these vessels. Concurrently, changes in the global crude production landscape are also in motion, with the majority of growth expected to come from the US and Latin America. Conversely, the Middle East and the Former Soviet Union are anticipated to witness a decline in production.”