Tankers - May 2026: Market Review & Outlook

A contribution by:

What to watch: 

Middle East export flows, the Arabian Gulf to Atlantic earnings spread, the trajectory of crude inventory drawdowns, Chinese stockpiling behaviour, refinery utilisation, the pace of new tanker contracting and demolition levels. 

The tanker market eased from its first-quarter extremes in May while remaining well above normal levels. The Baltic Dirty Tanker Index closed at 2,088 and the Baltic Clean Tanker Index at 1,557, both above their one-year averages (roughly 1,597 and 945) and their two-year averages (roughly 1,307 and 828). On an annual basis the dirty index sits at the 78th percentile and the clean at the 81st. On a quarterly basis the dirty index has fallen to the 23rd percentile and the clean to the 35th. Month-end rates are therefore high relative to the year and low relative to the second quarter, which indicates a consolidating market. Rates have declined from the quarter’s peak and remain above their longer-term averages.

The character of the market changed through the month, from crisis-led pricing to risk-premium pricing. Rates had responded directly to disruption, route uncertainty and concern over Middle Eastern exports; by May those pressures were being absorbed and rates did not return to normal levels. The market is now pricing the standing risk premium left by the disruption, reflected in routing, voyage planning and energy security.

The gap between crude and product tankers widened. Crude carriers held firm overall, supported by longer voyage distances, limited vessel availability and continued uncertainty over crude flows. That headline firmness masks a widening split by basin: Arabian Gulf earnings remained exceptionally high on Strait of Hormuz risk, while the Atlantic and other regions softened as vessel supply began to outpace cargo demand. The blended dirty index therefore overstates the strength now available outside the Gulf. Product carriers eased more clearly as arbitrage opportunities narrowed and refined-product movements adjusted, although clean earnings remained profitable by historical standards. The correction represents a normalisation from extreme levels.

Inventories remained central to the market, with the tanker complex still in an inventory-driven pause. Global crude stocks continue to matter more than headline demand and Chinese stocks are particularly important: large inventories suppress immediate import requirements, while continued drawdowns elsewhere increase the likelihood of an eventual restocking cycle. The next significant catalyst for crude tankers is therefore more likely to come from the timing and scale of replenishment than from geopolitics directly.

The secondhand market also cooled, recording 30 tanker sales in May, around 2.78 million deadweight, roughly half of April’s 65 and below the 81 and 69 recorded in January and February. Activity has eased from an exceptional pace to a more normal one. Liquidity remains and the urgency has reduced.

Ordering nevertheless increased. Tanker contracting above 10,000 deadweight ran roughly 130 percent ahead of a year earlier in vessel numbers and about 124 percent ahead in deadweight. The comparison, however, is made against an unusually low spring of 2025; The increase therefore reflects a recovery in appetite from a low base.

This does not yet threaten the near-term supply balance. The tanker orderbook is concentrated in later delivery years, spread across 2026 to 2029, leaving the market protected from immediate supply pressure. Demolition remained very low in absolute and fleet terms, single digits against a fleet of approximately 18,000 vessels. The latest reported month, April, recorded six removals, at the higher end of the past two years’ range. Scrapping remains minimal relative to the fleet and owners are retaining most older tonnage.

The tanker market has moved past its peak without weakening. It is consolidating at a high level: rates have declined from their crisis highs, while inventories, energy security, fleet availability and route risk continue to support owners. The main uncertainty is whether the expected inventory drawdowns lead to a restocking cycle.