BEST JANUARY BDTI for 20 YEARS!

January’s Baltic Dirty Tanker Index just delivered its strongest reading since 2006. The obvious question is: why now?

Is it Geopolitics?

As the Trump administration pushes a more assertive doctrine of US hemispheric dominance, actions against Venezuela — including tanker seizures — now amount to a de facto constraint on the country’s oil exports. China’s oil-for-loan scheme with Venezuela has been disrupted, while Beijing’s arrangements with Moscow and Tehran also look endangered by US military actions.

Meanwhile a US “armada” steams towards Iran with President Trump saying the Iranian regime has only days left to “make a deal” to end its nuclear enrichment work and any work on nuclear weapons.  The US administration insists that last June’s bombing raids neutralised Iran’s nuclear infrastructure, raising questions about what strategic objectives remain — containment, deterrence, or regime pressure. 

Oil markets have reacted to the rising uncertainty.  Brent and WTI prices have both risen by around 7% this week as geopolitical risk premia re-entered the market.

Is it the USD?

The nomination of political weathervane Kevin Warsh as the next Fed Chair might affect oil prices too if investors begin to feel squeamish about US interest rates and the value of the dollar.

That neatly brings us to tanker freight rates. Periods of dollar weakness often coincide with firmer freight markets. The relationship is not mechanical, but weaker USD conditions tend to lift nominal prices across commodities — freight included. There are many possible explanations, but in practice freight is often swept along with a broader rise in nominal prices when the dollar weakens.

Still, crude oil tanker owners have much to cheer about because the Baltic Dirty Tanker average for January this year of 1,457 points is the best January since 2006. A January average of 1,457 points places this winter firmly outside the post-GFC “lost decade” for crude tankers and back into territory last seen during the China-led supercycle.

Is It China’s Strategic Petroleum Reserve?

The noughties were a halcyon time for oil tankers as China led Asia in an economic boom while the single hull tanker phase out loomed over fleet supply.  The BDTI averaged over 1,000 points in each of 2003 to 2008. Then the GFC struck just in time for all the new double-hull ships to be delivered from the shipyards. The result was a 13 year slump in tanker freight markets with only 2015 providing any sort of respite.

That respite, it turned out, was due to China building its Strategic Petroleum Reserve and adding around 40 days of supply to it, taking advantage of very low oil prices. Coincidentally, China, it is widely reported, has been topping up and expanding its SPR in 2025 and 2026, again taking advantage of cyclically low oil prices. It was a timely decision, as it turns out, as Mr Trump has prevented China from accessing around 0.7 Mn bpd from Venezuela and he might prevent even more oil being shipped from Iran to China.

China’s actions in 2015 and again a decade later have turbo charged a crude oil tanker freight market being driven by resilient oil demand, lengthening global supply chains between oilfields and refineries, and restrained supply.

Is it Limited Tanker Supply Growth?

Fears of peak oil demand and decarbonisation regulations held ship owners off from contracting new tankers for several years.  Three years ago the VLCC orderbook was reduced to just 10 LNG-dual fuel units, all on order against long-term charter to Shell, which happened to be the market leader in LNG marine fuel.

As of the end of 2025 however, the VLCC orderbook has ballooned to 150 units including 38 due for delivery this year and another 61 in 2027. In 2028 another 44 VLCCs are due and perhaps the shipyards can find  berths for one or two more before 2029 when there are currently six scheduled to deliver.  Rumours of 10 more VLCC orders from the MSC-famed Aponte family have circulated all week.

By international convention, tankers have to retire at 25 years old and get scrapped. Some shadow fleet tankers have, like Michael York and Jenny Agutter in Logan’s Run, avoided the axe but there are 131 VLCCs due for retirement by the time the current orderbook delivers. A net gain of just 19 VLCCs over three years suggests that tanker owners may be in for a couple more profitable Januaries before the supply-demand balance turns against them.

It's All of the Above

With 150 VLCCs on order but 131 units reaching conventional retirement age before those ships deliver, the arithmetic is more supportive than the headline orderbook suggests. A net fleet increase of fewer than 20 VLCCs spread over three years implies that the supply–demand balance may remain tighter for longer than many expect.

For tanker owners, that points to the prospect of a few more profitable winters before the cycle eventually turns. For charterers and analysts, it underlines why crude tanker markets remain acutely sensitive to geopolitics, trade route lengthening, and marginal changes in fleet utilisation.

If you found this analysis useful, you can subscribe to this Substack for regular, data-driven commentary on tanker markets, oil trade flows, and shipping cycles — written for practitioners rather than headlines.

And if you’d like to go deeper into how VLCC markets actually work — from freight formation and tonne-mile dynamics to fleet age profiles and orderbook risk — you may be interested in my Shipping Analysis course: An Introduction to Shipping Market Fundamentals.

The course is designed to bridge the gap between academic theory and real-world market practice, using live data and case studies from the crude tanker market. Details and upcoming dates are available here.