US action in Venezuela sends strong broader signal to tankers: Frontline

US pressure on Venezuela, including the recent seizure of a tanker in Venezuelan waters, signals a bullish outlook for tanker markets, according to Frontline CEO Lars Barstad.

Speaking at a Capital Link webinar on Dec. 16, Barstad said the US is demonstrating a willingness to tackle issues surrounding Venezuela, not only concerning oil but also broader geopolitical challenges.

On Dec. 10, the US seized a tanker off the Venezuelan coast, with President Donald Trump announcing plans to blockade sanctioned oil tankers to and from the country. This move is part of Washington's ongoing campaign to oust Venezuelan President Nicolás Maduro.

While the individual seizure may have limited immediate impact, Barstad emphasized that "the policy emerging from it has the potential to be very potent." He noted that Venezuela's oil exports have steadily increased.

S&P Global Commodities at Sea data showed about 100,000 b/d of Venezuelan exports utilized sanctioned vessels from January to November.

Even prior to the new blockade, US enforcement actions had already reduced Venezuela's crude shipments to zero for the week ending Dec. 13, aside from those tankers to the US.

The number of oil tankers heading to Venezuela has also decreased following the recent escalation, down to 17 tankers for the week starting Dec. 14 from 24 vessels in mid-November, CAS data shows.

Tanker market support

With the blockade, shipowners and insurers are likely to adopt a risk-off stance, leading to more delays, cancellations, and ship reversals, analysts at S&P Global CERA said Dec. 17. These disruptions will likely push up regional dirty tanker freight rates and insurance costs, further widening the Merey 16 discount to Dated Brent as logistics become more expensive, the CERA analysts said.

Barstad described the US action as a long-term positive for the tanker market, even if short-term effects remain uncertain. "Sanctioned crude is struggling to find a home, and this is good because it means that actors are actually switching towards compliant barrels, which benefits owners that shy away from gray or dark oils," he said.

The policy shift could also affect trade routes and vessel demand. DHT CEO Svein Moxnes Harfjeld, also speaking at the webinar, noted, "If Venezuela doesn't sell to China anymore, China will need to replace some of the heavy sours. So we'll see more ton miles on Aframaxes in the Pacific, with knock-on effects for VLCCs."

Mikkel Seidelin, CCO at Teekay Tankers, said there is "no extra surplus," referring to tightening supply, which kept oil markets particularly sensitive to uncertainties like sanctions. "Every geopolitical event, there is an upside. When rates react as quickly as they do now, it says something about the market," he added.

The Platts global Aframax index, for non-scrubber-fitted, non-eco vessels has been on a broadly upwards trajectory since Dec. 9, rising from $47,745.83/day then to $51,509.43/day Dec. 16. Platts is part of S&P Global Energy.

These developments come amid rising global oil demand. The International Energy Agency, in its Dec. 11 monthly report, trimmed its 2025 global oil supply growth outlook by 100,000 b/d to 3 million b/d, while raising demand forecasts by 50,000 b/d for 2025 and 90,000 b/d for 2026.

"Incremental growth from sanctioned countries is not stopping the growth of global oil exports," Barstad said. "Ultimately, the compliant market continues to supply the marginal barrel."