A Look at Market Trends
The clean products (such as gasoline, gasoil, naphtha, and jet fuel) shipping market from the Persian Gulf in the first two months of 2026 experienced a downward trend. Following a relatively stable January, the market in February saw rate declines across all segments—LR2, LR1, and MR—due to an increase in vessel supply and a demand lull caused by the Lunar New Year holidays. This article provides a detailed examination of these changes, compares rates in January and February, and analyzes the underlying reasons behind these developments.
Market Analysis and Comparison (January vs. February 2026) by Oilload
In this section, we compare freight rates for LR2, LR1, and MR vessels on key routes from the Persian Gulf during January and February 2026.
1. LR2 Vessel Market (Persian Gulf to Japan Route)
LR2s are the largest clean product vessels in this analysis, and their rates are often seen as a key indicator for the broader market.
January 20, 2026: The Worldscale rate was assessed at w215. Despite no reported fixtures, signs of market softening were evident, with some charterers submitting lower bids.
February 11, 2026: The rate saw a significant drop to w173. A confirmed fixture by Admic for the vessel STI Kingsway at w173 was reported as the primary reason for this decline. Market participants described this fall as a gradual correction, attributing it to ample vessel availability in the Persian Gulf compared to cargo volumes.
February 16, 2026: The LR2 rate reached w170 and largely stabilized at this level. Another fixture was reported by OQ for the vessel Torm Gloria (with the option to substitute Torm Gemma) on the Duqm-to-Japan route at this same rate. This relative stability indicated that the market had found a new equilibrium after a period of decline.
Conclusion: The LR2 rate decreased by 21% during this period (from w215 to w170). The primary reason was the increased supply of vessels in the Persian Gulf coupled with insufficient demand. The fixtures recorded in February (STI Kingsway and Torm Gloria) clearly confirmed this downward trend.
2. LR1 Vessel Market (Persian Gulf to Japan Route)
The LR1 market followed a similar trend, although the initial rate of decline was slightly different.
January 20, 2026: The LR1 rate was assessed at w222.5. While no fixtures were reported, a wide range of bids and offers (between w215 and w235) suggested market volatility and uncertainty.
February 11, 2026: The rate experienced a sharp drop to w185. A fixture by ExxonMobil for the vessel Lian Yang Hu on the Sikka-to-Japan route at w185 was recorded. One reason cited for the steeper decline was LR1 rates being "dragged lower" by the falling LR2 rates, as the larger vessels intensified competition.
February 16, 2026: The LR1 rate fell further to w178. No fixtures were reported on this day, and the assessment was based on the most competitive bids and offers during the Market on Close (MOC) process.
Conclusion: The LR1 rate experienced a drop of about 20% in the same timeframe (from w222.5 to w178). The rate of decline was also steep, and the Lian Yang Hu fixture in February solidified the new, lower rate level. This decrease, besides high vessel supply, was also influenced by pressure from falling LR2 rates.
3. MR Vessel Market (Various Routes)
The MR market, involving the most flexible vessels, showed somewhat different behavior.
Late January: The MR market in Southeast Asia and the Persian Gulf was relatively stable, even showing a tendency to firm up. For instance, the vessel PS Hamburg was placed on subjects for the Jubail-to-Japan route at w232.5, and Shell placed the vessel Jag Pushpa on subjects for the Ruwais-to-East Africa route at the high rate of w290 (with a South Africa option at w280).
February 11, 2026: MR rates in the Persian Gulf weakened. A fixture was reported for the vessel Ardmore Engineer on the Persian Gulf-to-Japan route at w175. Additionally, BP placed the vessel Draco on subjects for the Duqm-to-East Africa route at w220 (with a South Africa option at w210), a significant decrease compared to the Shell deal in January.
February 16, 2026: In East Asia, the MR market was sluggish due to the Lunar New Year holidays and the absence of Chinese and South Korean participants. However, rates in the Persian Gulf were reported as stable. A fixture was recorded for the vessel Sea Wolf on the Persian Gulf-to-East Africa route at w190, which was also lower than the BP deal on February 11 (w220).
Conclusion: The MR market, which showed strength in January, faced rate declines in February. Rates on the Persian Gulf-to-East Africa route dropped from around w290 (Shell deal) in late January to w190 in mid-February, marking a 34% decrease. The Lunar New Year holidays directly impacted activity in East Asia, and excess supply over demand pushed rates down in the Persian Gulf as well.
Rate Comparison Table (January vs. February 2026)
To better understand the changes, key rates are compared in the table below:
| Route | Vessel Type | Rate on Jan 20, 2026 | Rate on Feb 16, 2026 | Change |
|---|---|---|---|---|
| Persian Gulf - Japan | LR2 (75,000 mt) | w215 | w170 | 🔻 21% Decrease |
| Persian Gulf - Japan | LR1 (55,000 mt) | w222.5 | w178 | 🔻 20% Decrease |
| Persian Gulf - East Africa | MR (35,000 mt) | w290 (Shell deal) | w190 (Sea Wolf fixture) | 🔻 34% Decrease |
Final Analysis and Reasons for the Changes
The clean products shipping market from the Persian Gulf entered a correction phase in February. The main reasons for this decline can be summarized as follows:
Increased Vessel Supply: Across all February reports, market participants consistently noted that the number of available vessels in the Persian Gulf exceeded the number of cargoes offered. This imbalance favored charterers, enabling them to impose lower rates on shipowners.
Lunar New Year Slowdown: The Lunar New Year holidays in mid-February led to the absence of key market players from China and South Korea. This directly reduced demand, especially for MR vessels in East Asia, and contributed to a quieter overall market sentiment.
Influence of LR2 Rates on Other Segments: The decline in LR2 rates acted as a negative signal for the entire market. Reports indicated that the drop in LR1 rates was directly influenced by this trend. Some charterers even considered substituting LR1 cargoes with LR2 or MR vessels to take advantage of lower rates.
Short-term Outlook: With the holidays ending and Asian participants returning to the market, demand is expected to pick up. However, the vessel surplus in the Persian Gulf may continue to act as a barrier to any rapid rate increases. Analysts believe the market needs fresh testing with new cargo inquiries to determine its future direction.
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Key Terminology (In Simple Terms)
Before diving into the analysis, it's essential to understand the key terms used in this market:
Clean Products: Refers to refined light petroleum products like gasoline, gasoil (diesel), naphtha, and jet fuel. These must be transported in vessels with clean, coated tanks.
Worldscale Rate (w): A global standard system for expressing maritime freight rates. A base rate (Flat Rate) is set annually for each route, and the Worldscale rate (w) is a percentage of that base rate. For example, a rate of w170 means the charterer pays 170% of the base rate for that specific route.
LR2 (Long Range 2): Refers to larger clean product tankers with a carrying capacity of approximately 75,000 to 90,000 metric tons.
LR1 (Long Range 1): Smaller than LR2 vessels, with a carrying capacity of approximately 55,000 to 65,000 metric tons.
MR (Medium Range): Medium-sized, highly flexible vessels, typically carrying between 35,000 and 50,000 metric tons.
Cargo: The goods being transported (in this case, clean petroleum products).
Charterer: The person or company that hires a vessel to transport cargo.
Owner: The person or company that owns the vessel and offers it for charter.
On Subjects: A stage in negotiations where a charter offer has been made but is not yet finalized, pending confirmation of certain conditions like vessel inspection or cargo details.
Fixture: A finalized and concluded agreement between a shipowner and a charterer.
PG (Persian Gulf): Abbreviation for the Persian Gulf.
Lunar New Year Holidays: An official holiday in China and some other Asian countries, during which many market participants, including those in South Korea and China, are away, leading to a significant drop in activity.
