Platts to launch Red Sea-UKC, Red Sea-Med LR2 clean tanker assessments

Platts, part of S&P Global Commodity Insights, has decided to launch two daily Long Range II or LR2 clean tanker route assessments for Red Sea-UK Continent and Red Sea-Mediterranean, effective Aug. 1.

The two lump sum and corresponding dollar per ton assessments will be for 90,000 mt loadings.

Platts first proposed the launch of these two assessments through a proposal note on June 14:

https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/061423-platts-proposes-to-launch-red-sea-ukc-red-sea-med-lr2-clean-tanker-assessments

The move follows observed changes in vessel flows and trading patterns.

With Saudi Arabia ramping up its refining capacity along its Red Sea coast by setting up new refineries and expanding existing units, the country is exporting substantial volumes of clean petroleum products to Northwest Europe and the Mediterranean.

The newly launched Jazan refinery has a daily processing capacity of 400,000 barrels and was expected to ramp up production of ultra low sulfur diesel, which at full capacity can produce 250,000 b/d, according to industry estimates.

That is in addition to the exports by Yanbu Aramco Sinopec Refining Co (Yasref), which operates a 430,000 b/d refinery in the Red Sea.

An estimated 700,000 mt of diesel is moved from the Red Sea to the UKC and Mediterranean every month on LR2s, which equates to close to eight LR2 fixtures.

Market participants expect clean petroleum product exports from the Red Sea to Europe to increase further on the back of the ongoing Russia-Ukraine war, which has disrupted regular trade flows.

Also, the sanctions on Russia have forced buyers in Europe to look for products from other regions including the Red Sea.

The preferred class of tanker for trade on this route is the LR2 compared with Medium Range and LR1 tankers.

The Red Sea-UKC and the Red Sea-Mediterranean assessments will reflect value at the Asian market close at 4:30 pm Singapore time {0830 GMT} and follow the Singapore publishing schedule.

These assessments will be published in the Platts Clean Tankerwire, Clean Tankerwire Monthly and pages PGT2922, SHP0330, PGT2923 and SHP0331.

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