top of page

Tanker Trade Tightens: First VLCC Scrapping in Two Years

Maggie Johnson

By Maggie Johnson

December 29, 2024


Image Credit: “AMOR--Vesseljoin,” available at Yahoo Images (12/29/2024).

The Amor, a Cameroon-flagged supertanker associated with the transportation of Iranian oil, is set to become the first very large crude carrier (VLCC) scheduled for demolition in more than two years. This development highlights the growing challenges for operators of vessels involved in transporting sanctioned crude as they face intensified scrutiny and stricter regulations.

The 24-year-old ship was recently sold to an Indian scrapyard, according to updates from BRS Shipbrokers and scrap dealer Wirana Shipping Corporation. Its scrapping is a rare and significant occurrence, marking the first planned dismantling of a VLCC since the Uranus in late 2022. This infrequency reflects a surge in demand for older tankers following Russia's invasion of Ukraine and the Western sanctions imposed on Moscow.

In the wake of these sanctions, the market for aging tankers—often over two decades old—expanded rapidly as private companies purchased inexpensive vessels to form a so-called "dark fleet." These ships have become vital for transporting sanctioned oil from exporters such as Iran and Russia, operating well beyond their typical service lives. The Amor exemplifies this fleet with its age, flag, and operational history. The U.S. Energy Information Administration identified it in October as a vessel linked to Iranian crude exports, though U.S. authorities have not blacklisted it.

While the reasons behind the Amor's scrapping remain uncertain, the decision reflects broader trends in the shipping market. Many dark fleet tankers continue operating despite age, but mounting pressures are evident. Stricter sanctions have made it riskier for older vessels to find charters, with some being idled at sea or avoided altogether. Additionally, weakening global oil demand has reduced tanker rates, further diminishing the profitability of older ships.

"Chinese demand and OPEC supply remain stagnant at best while vessel-specific sanctions intensify. A clean-up of the aging fleet via scrappage is clearly overdue," said David Wech, chief economist at analytics firm Vortexa.

Financially, scrapping older vessels can be highly beneficial, but timing is critical. Ships blacklisted by the U.S. Office of Foreign Assets Control (OFAC) see their scrap value plummet as mainstream yards and dealers avoid them to sidestep secondary sanctions. This underscores the urgent need for a clean-up of the aging fleet via scrappage.

Attempts to contact the Amor's listed owner, Amor Fleet Inc., and its manager, Valiant Marine Ventures FZE, were unsuccessful. Both entities are registered in the UAE's Sharjah International Airport Free Zone, but inquiries into the zone went unanswered. Reports from the maritime database Equasis indicate that structural issues may have influenced the decision to scrap the vessel. Earlier this year, it was detained at a Chinese port for deficiencies such as structural problems, fire safety issues, and inaccurate load markings.

Recent sanctions targeting individual ships have added further challenges for the dark fleet. The U.S., U.K., and EU have expanded their lists of blacklisted vessels, contributing to a downturn in freight rates. Meanwhile, reduced demand from China—one of the largest Russian and Iranian oil buyers—has compounded these difficulties.

Since October, U.S. sanctions have focused on tankers transporting Iranian crude. Bloomberg data reveals that over 30 supertankers, capable of carrying 60 million barrels, have joined the dark fleet. This is significant compared to China's monthly consumption of approximately 52 million barrels of Iranian oil, based on Kepler data.

The outlook for 2025 suggests continued pressure, with the incoming U.S. administration pledging to reinstate a "maximum pressure" campaign on Iran. This approach, first implemented in 2018, involves harsh sanctions aimed at curbing Iran's nuclear ambitions and regional influence, signaling sustained scrutiny of ships engaged in the sanctioned oil trade.

Although slated for dismantling, the Amor's fate remains uncertain and open to change. Until it reaches Alang, Gujarat, its sale could be renegotiated or canceled. Currently, the ship remains near Khor Fakkan in the UAE, leaving its ultimate fate unresolved and the industry in a state of suspense.

2 views0 comments

Comments


bottom of page