The global oil market began 2025 shrouded in uncertainty, defying expectations of continuing the weak trends that characterized late 2024. The U.S. government's sanctions on over 180 tankers and its hardened stance against vessels transporting oil from Iran, Russia, and Venezuela triggered retaliatory tariff policies—dubbed "Liberation Day" measures—that stoked fears of a global trade war.
These developments slowed oil demand growth and sent shockwaves through global stock markets, particularly battering crude and refined product tanker stocks. However, market prospects shifted when tariff policies were temporarily suspended for 90 days. By May 9, 2025, the Drewry Crude Tanker Index showed a 10.9% year-over-year gain , while the Drewry Product Tanker Index plummeted 12.9% , revealing stark divergence between the sectors.
Product Tanker Sector Faces Perfect Storm
Multiple factors drove this divergence, with most negatively impacting the product tanker industry. Compared to crude markets, refined product fundamentals weakened significantly due largely to excessive vessel supply . The 2022-2023 product tanker earnings boom prompted massive newbuilding orders from operators. These vessels began flooding the market in late 2024, causing available capacity to surge and depressing freight rates.
The imbalance became glaring by early 2025, with 50 product tankers delivered versus just 9 crude tankers. This delivery disparity will likely intensify pressure on product tankers through 2028, as their orderbook dwarfs crude tanker additions.
This vessel glut threatens to suppress rates for multiple quarters, raising investor concerns about product tanker companies' profitability—fears already reflected in their declining stock prices. Meanwhile, slowing demand growth for diesel and gasoline (80% of product tanker demand) due to EV adoption and fuel efficiency gains compounds the challenge.
Regional refining capacity expansions—including Nigeria's Dangote and Mexico's Olmeca refineries—are reducing import dependence, while European refinery closures further dampen product tanker demand.
Crude Tankers Chart Stronger Course
In contrast, crude tankers enjoy brighter prospects. After 2024's slump, global refinery output is rebounding in 2025 , boosting seaborne crude demand—especially for VLCCs. Increased crude imports by Asian refiners, particularly China, should improve vessel utilization.
U.S. sanctions on Russian tankers and Iranian oil may disrupt trade flows, forcing major buyers like India and China to seek alternative suppliers—potentially increasing long-haul crude shipments . Additionally, the midsize tanker market could tighten as non-sanctioned vessels redeploy to Russian trade routes.
Asset price declines further highlight the sectors' divergence. Product tanker values fell dramatically—5-year-old LR2s and LR1s dropped 7.2% and 8.0% respectively—while VLCCs and Suezmaxes saw modest declines of just 2.4% and 0.6% .
Outlook: Divergence to Continue Through 2025
The first quarter of 2025 established clear divergence between crude and product tanker markets—a trend expected to persist through year-end. The combination of swelling product tanker deliveries and weak oil demand growth will likely severely pressure product tanker company revenues , creating stark contrast with their crude-focused counterparts.
With product tanker asset values declining more steeply and market fundamentals weakening, the crude tanker segment appears positioned for relatively stronger performance in the coming years.