A ceasefire between Russia and Ukraine could trigger a meaningful shift in the global tanker market, and the first impact may be negative, according to G. Shivakumar, Executive Director and Chief Financial Officer of GE Shipping, India’s largest private-sector shipping company.
Shivakumar said the tanker market has benefited from altered trade routes since the conflict began. Russian crude and refined products were diverted away from Europe and redirected to distant buyers, creating what he described as a “5 to 10% tonne-mile bump.” The longer voyages tightened supply and pushed freight rates to multi-year highs. A reversal of these trade flows, he said, “would be a negative development for tanker earnings.”
To explain the scale of the shift, Shivakumar pointed to the sharp rise in rates. “Four years ago, rates for tankers… were between $10,000 and $15,000 a day,” he said. Today, mid-sized crude carriers like Aframax and Suezmax are earning about $50,000 a day, while product tankers are making around $30,000 a day.
He said even a small change in ton-mile demand can move rates significantly in a tight market.
Shivakumar said a complete return to pre-war routes is improbable in the short term. A reversion would require multiple conditions: a ceasefire, the removal of European Union sanctions, and European buyers—including Germany—choosing Russian energy over current suppliers in the US, Brazil and West Africa. “That will take some time to play out in the tanker market,” he said.
Another pillar supporting current tanker strength is refining margins. Shivakumar described diesel margins in Europe at $35-40 per barrel as “unsustainably high.” These margins encourage long-distance movement of crude and products, boosting tanker demand.
If Russian supply re-enters Europe after a ceasefire, he expects margins to “come down substantially.”
He added that high freight rates have kept many older ships operating longer than usual. If rates weaken, many of these over-aged vessels may be scrapped, helping rebalance supply over time.
GE Shipping, with a market capitalisation of ₹15,660.01 crore, has seen its stock decline over 2% in the past year.
