Performance Shipping sees 'firm' tanker market

Greek Aframax-class oil tanker owner Performance Shipping said today it expects disruptions to oil trade flows and constrained fleet growth to continue supporting freight rates.

The shift in trade patterns from the Russian oil trade and disruptions in the Red Sea, resulting in longer-haul tanker voyages and increased tonne-mile demand, continued to support rates in the second quarter of this year in conjunction with limited tanker supply growth, the company said.

Performance Shipping's average time charter equivalent (TCE) rate for the second quarter was $30,970/d, compared with an average $41,868/d for the same period in 2023.

Performance Shipping said it expects rates to remain "firm" and it will continue to balance exposure to short- and medium-term time charter contracts with the spot market. Aframax rates are generally lower globally than in 2022 and 2023, during the peak of disruption from the G7+ embargo on Russian oil imports, but remain above long-term historical averages.

The company has one of its seven Aframaxes operating in the spot market, under a pool arrangement, while the other six are under time charter contracts with anticipated fixed revenue of $61.1mn at the beginning of the third quarter. One time charter contract expires in August, and Performance Shipping expects to employ this tanker in the "promising" spot market into the seasonally strong autumn and winter periods.

The company has secured five-year time charters for three newbuild LNG-ready Aframaxes, which will generate gross revenues of $169.8mn, it said. It has one Long Range 1 (LR1) product tanker on order with an expected delivery between late 2025 and early 2027.

Performance Shipping made a profit of $10.2mn in the second quarter of 2024, down from $18.4mn in the same period of 2023. Revenue was $20.5mn in April-June 2024 compared with $31.5mn in the same period of 2023 because of a decrease in TCE rates and a drop in ownership days following the sale of P Kikuma in December 2023, the company said.

By Matthew Mitchell