The clean large refined (LR) tanker market is shifting from a period of supply tightness toward normalization, according to a novel analysis by Vortexa. While freight rates remain elevated, a surge in new vessel deliveries coupled with the potential for altered trade routes and diminished incentives for vessels to switch to dirty trades are poised to ease pressure on rates throughout 2026.
So far in 2026, 13 LR tankers have been delivered, with the majority immediately entering clean product trades, adding to available capacity. With approximately 75 LR deliveries scheduled for the remainder of the year, and a further 65 penciled in for 2027, the clean LR fleet is expected to expand steadily, creating a persistent supply tailwind. This contrasts with 2025, when a significant number of newbuilds were absorbed due to vessels shifting into the dirty tanker sector and continued routing inefficiencies caused by avoiding the Red Sea.
Last year, over 50 LR newbuilds were delivered, but the clean market did not experience a corresponding oversupply. A substantial number of LR2 vessels transitioned into dirty employment, effectively reducing the number of ships available for clean product trades and alleviating supply pressures. However, the incentive for this shift is waning. According to Vortexa, the attractiveness of dirty trades has diminished as support for Aframax tankers—often used for crude oil—has begun to weaken.
The demand for Aframax tankers has been closely tied to sanctions and the movement of vessels into “dark fleet” employment—those involved in sanctioned trades. While the dark fleet remains constrained, the rate at which vessels are switching from mainstream trading into sanctioned activities has slowed. The robust transatlantic crude program that previously supported Aframax earnings is facing headwinds. The return of crude oil from the Caspian Pipeline Consortium (CPC) could reduce the need for European refiners to source replacement barrels through long-haul Atlantic Basin voyages, diminishing a key driver of Aframax demand.
While Venezuelan exports to the U.S. Gulf Coast (PADD3) continue to provide support for Aframax rates, the recent trade deal allowing for increased exports to India favors Suezmax and Highly Large Crude Carriers (VLCCs). This means that a recovery in Venezuelan exports does not automatically translate into increased demand for Aframax tankers. If Aframax earnings decline while clean LR2 rates remain viable, the incentive for owners to switch vessels to dirty trades will further diminish, potentially leading to more capacity remaining in, or even returning to, the clean market.
The possibility of tankers resuming voyages through the Suez Canal remains uncertain. Despite Maersk signaling a willingness to reroute some container services through the Canal after over 100 days since the last reported Houthi attack, tanker owners have not followed suit. Owners are hesitant to be the first to return, citing asset risk and ongoing tensions between Iran and the U.S. Any return to the Suez Canal is likely to be limited and opportunistic, based on specific risk assessments, rather than a widespread shift in voyage patterns.
However, a de-escalation of geopolitical tensions could gradually lead to a normalization of Suez Canal transits in the second half of 2026. To maintain current tonne-mile levels—a measure of the distance goods are transported—if LR East-to-West voyages revert from the Cape of Good Hope back to the Suez Canal, liftings would need to increase by around 74% to offset the reduced voyage distances. Current constraints on clean product flows, driven by refinery run rates and limited alternative outlets, make such a substantial increase in volumes unlikely. Any significant normalization of routing would likely result in a clear reduction in tonne-mile demand for the LR fleet.
The age profile of the LR fleet as well plays a role. LR2 tankers are generally younger than LR1s, limiting natural attrition through scrapping. Even with a high number of deliveries, scrapping is unlikely to keep pace with new vessel additions, as much of the existing fleet remains commercially viable. Older, non-sanctioned LR tonnage continues to operate, albeit with increasingly segmented and domestic employment patterns. Voyage counts have risen across both age brackets since 2023, with vessels aged 15 to 20 years showing growth in both clean and dirty activity, and a clear preference for dirty voyages.
For vessels over 20 years old, domestic trading is even more pronounced, with a higher percentage of voyages occurring within countries. This suggests that older LR tankers do not readily exit the market, as they continue to find viable, albeit peripheral, employment pathways. Demolition decisions will likely remain contingent on earnings potential.
Net refinery additions in 2026 are concentrated in the Pacific Basin, particularly in Northeast and Southeast Asia. This raises the possibility that increased Asian output will be exported when domestic demand is soft. However, refinery closures in the Americas, such as the Benicia facility on the U.S. West Coast, could tighten local supply and necessitate longer-haul repositioning moves across the Pacific, potentially boosting tonne-miles for Medium-Range (MR) tankers. However, the current closure profile does not suggest a substantial shift in Atlantic capacity that would significantly increase Pacific-to-Atlantic basin volumes.
the evolving refinery landscape is expected to create pockets of tonne-mile support and favor larger vessel classes through economies of scale, but the impact is unlikely to be substantial enough to offset broader clean fleet supply growth. The LR market is transitioning from a supply-tight environment to one of normalization, with a heavy delivery schedule, reduced incentives for dirty trades, and the potential for a return to Suez Canal transits all contributing to easing supply pressures.
