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Donald Trump’s erratic foreign policy has discouraged oil traders from signing long-term charter contracts for tankers, according to leading industry figures, heaping further uncertainty on vessel owners.
Shipowners and one of the world’s biggest commodity traders said a combination of the US president’s trade wars and interventions in international conflicts were putting traders off signing “time charters”. The vessel leasing agreements give both shipowners and charterers long-term certainty — often over several years — about the cost of moving products and charter income.
Trump’s actions have added to uncertainty about future costs and risks in markets already facing multiple challenges. Those include issues around attacks by Yemen’s Houthis on ships in the Red Sea, which have driven up shipping costs by forcing vessels to take longer routes, and the war in Ukraine.
Mikael Skov, chief executive of Hafnia, one of the world’s largest tanker operators, said that “every day” there were “new statements” from the new US administration.
“Oil traders, other shipowners — everybody’s kind of having the same view that it’s probably more difficult now to do long-term deals,” he said.
The uncertainty had hit the value at which shipowners could sell second-hand vessels, Skov added. “Not so many people are going to buy a ship unless they have the opportunity of leasing it out for three to five years.”
Skov’s comments come after Denmark’s Norden, a large operator of tankers and dry-bulk carriers, highlighted the uncertainty facing the sector by predicting net profits for 2025 of anything between $20mn and $100mn.
Canadian tanker owner Teekay also noted the considerable uncertainty in the market when giving its guidance for 2025 on February 19.
“It is difficult to predict how these factors will unfold during 2025, what their impact will be on the tanker market, or if there will be additional geopolitical events,” it said of the uncertainties it faced.
Andrea Olivi, global head of shipping at Singapore-based Trafigura, one of the largest oil and commodities traders, said people were “definitely more cautious” about entering into long-term shipping contracts.
The uncertainties related not only to tariffs but also the war in Ukraine and use of the Red Sea, Olivi said. Shipowners’ profits have risen over the past year as most have avoided the Red Sea because of attacks on commercial vessels by Houthi militants. Diversions via the longer route around the Cape of Good Hope have significantly driven up shipping times and costs.
However, the chances of a return to the Red Sea increased after the Houthis last month said they would scale back their attacks following the ceasefire deal in Gaza.
“Any major developments there would have a big impact on freight rates,” Olivi said of the Red Sea. “A lot can happen in the next three to six months.”
On tariffs, Teekay said that threatened US tariffs against crude oil imports from Canada and Mexico could boost some tanker trades. The company said levies could increase US seaborne trade with other countries and push more Canadian and Mexican oil to Asia.
However, it also said US tariffs on China could harm Chinese oil demand and imports.
On Ukraine, tanker owners are questioning how any peace deal might reshape oil trading patterns. Russia’s oil exports have been hit by wide-ranging sanctions from the US and other western nations since its full-scale invasion of Ukraine in February 2022.
Skov asked what would happen if sanctions were lifted. “What does that do with oil transportation patterns versus where they were?” he said.
The uncertainties in the market are also raising questions about the availability of fuel for ships — known as bunker — according to Jan Dieleman, head of ocean transportation at commodities trading group Cargill.
Cargill and Hafnia announced this week that they were combining their businesses suppling bunker to ships, in a push for greater scale and security over energy prices.
The uncertainties have mounted amid a market that Hafnia and other leading tanker owners insist is likely to be positive for owners in the long term. They expect that the current age of the global fleet will prompt owners to scrap vessels, constraining supply and driving up prices.
However, Sean Miller, co-head of tankers at London-based shipbrokers SSY, said markets were “besieged by geopolitical uncertainty”.
“In order for any normalisation to occur, several current political impasses would need to firstly be resolved and secondly the subsequent fallout analysed,” Miller said. “Until then the shipping space will remain inherently volatile.”
