The United States released the strategic petroleum reserve, and the freight rate of oil tankers on the two routes of the US Gulf rose sharply!

After Europe suspended 2.
7 million b/d of crude imports from Russia, the US decided to release 180 million barrels of strategic petroleum reserves over the next six months, which will support crude oil freight rates
on US routes in the second quarter of 2022.

Since February 24, the cargo volume of the two major crude oil export routes of the United States, Europe and the United States-Asia has risen sharply, with freight rates rising by 74.
1% and 53.
9%
respectively.
On April 7, the 70,000-ton carrier type freight rate of the US Gulf-Europe route was 42.
93 US dollars / ton, and the 270,000 ton ship type dry freight rate of the US Gulf-China route was 8 million US dollars, both of which were the highest since
the second quarter of 2020.

This trend is expected to continue for some time, with freight rates still rising so far, and with the release of U.
S.
strategic reserves, U.
S.
Gulf crude oil exports will be in a dominant position
.

After the United States announced the release of 180 million barrels of strategic petroleum reserves in six months, the International Energy Agency subsequently announced that its member countries had agreed to release 120 million barrels of crude
oil to the global market.
These production volumes are expected to spur an increase in tanker traffic, especially crude
oil exports from the Gulf region.

One shipbroker estimates that crude oil shipments will increase by 1 million b/d first, and more will likely be exported later
.
With the increase in the export of light crude oil, at least 8~10 Aframax tankers
need to be added every month on the US Gulf-Europe route.

U.
S.
exports increased

U.
S.
export growth has been trending in recent weeks, with the US Energy Information Administration reporting that U.
S.
crude exports totaled 3.
7 million b/d in the week ended April 1, up 705,000 b/d week-on-week, with exports to Europe up 906,000 b/d
from the previous week.

The pattern of Asian crude oil imports will also change
.
South Korea and Japan will increase imports from the United States, while China and India will continue to buy Russian crude
.

In its latest weekly report, shipbroking BRS said Europe accounted for most of the increase in U.
S.
exports, a key driver
pushing up the Gulf of American-Europe Afra tanker charter to nearly $33,000 per day.
The report predicts that VLCC and Suez tanker markets will also be boosted
.
South Korea has signaled its willingness to increase imports of U.
S.
crude, which could exceed 400,000 b/d
.

Freight rate trends by ship type

The main ship type on the Atlantic route is the medium-sized Afra-type tanker, and the freight rate of small tankers was the first to rise sharply, but charterers sought larger types in pursuit of economies of scale, resulting in higher freight rates for large ships
.
However, market participants expect charterers to return to smaller types
after the cycle in which VLCC and Suez tankers cannibalize Afra's share.

On April 1, the freight spread between the US Gulf and Europe routes for Suez/Afra tankers widened to $22.
82/mt, almost double the $11.
85/mt in February, indicating that larger tonnage ships have greater scale advantages
.

In March and the first week of April, a total of five VLCCs were locked for European routes in the US Gulf region, compared to five VLCCs in 2021 and two VLCCs in
2020.
Given that most European ports are unable to call VLCCs, this trend is unlikely to be sustainable
in the long term.