Pankaj Khanna, CEO of Hidemar Maritime Holdings Corp, reported a sharp decline in the export flow of refined products from the Persian Gulf at the 10th Annual Maritime Services and Shipping Conference in London on September 15. This decline has been so significant that the export flow, which once reached about 5 million barrels per day, has dropped to nearly zero.
Impact on Freight Rates
Khanna noted that product tanker freight rates have diverged from strong refining margins, and this imbalance could affect transportation markets over the next decade. He stated that with a potential 30% increase in the product tanker fleet and no expectation of fleet scrapping, this imbalance could lead to pressure on transportation markets.
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Increase in Refining Margins
While the export flow of refined products has declined, refining margins have surged significantly, reaching $32.18 per barrel on September 15. This figure is 166% higher than on February 27 and 149% above the five-year average. Analysts at S&P Global CERA also pointed out that global refining margins have remained high due to a lack of additional economic capacity and rising product prices.
Khanna also referred to the increased resilience of the crude oil tanker market, adding that oil flows from Saudi Arabia continue through the Yanbu pipeline corridor and the Strait of Hormuz. However, crude exports have decreased from 17.5 million barrels per day in 2025 to 11.2 million barrels per day in August.
He emphasized that although a 30% increase in the fleet is anticipated, this increase alone cannot be absorbed by cargo volume growth. He predicted that if disruptions in the Strait of Hormuz decrease in the fourth quarter, demand for crude tankers will decline by 10.5% to 12.5% in 2026, while it is expected to increase by 17% to 19.5% in 2027.
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