Oil traders are increasingly reluctant to enter long-term charter agreements for tankers, as ongoing uncertainties surrounding U.S. policies have created concerns within the shipping industry, according to industry sources.

This hesitation reflects an expansion of uncertainty for tanker owners, as major global commodity traders express caution in light of various geopolitical complexities.

Ship owners and top commodity traders have pointed to the combination of ongoing trade wars initiated by the U.S. and its involvement in international conflicts as significant deterrents to locking in long-term rental contracts.

Charter agreements, which typically last several years, provide both shipowners and charterers with long-term assurance regarding shipping costs and rental returns.

Recent decisions made by the U.S. administration have exacerbated uncertainty regarding future costs and risks, particularly as the shipping market faces considerable challenges.

These include threats from Houthi attacks in Yemen on vessels transiting the Red Sea, which have driven up shipping costs due to the need for longer routes, alongside the ongoing war in Ukraine.

Mikael Skov, CEO of Hafnia, one of the world’s largest oil tanker operators, noted that “new data” emerges from the U.S. administration “every day.” He reiterated that oil traders, shipowners, and others in the industry share the sentiment that establishing long-term agreements has become increasingly difficult.

Skov also addressed how this uncertainty has cast a shadow over the resale value of used shipping containers.

He stated, “Very few will purchase a vessel unless they have the opportunity to charter it for three to five years.”

Comments from Danish firm Norden, a prominent operator of oil and dry cargo tankers, indicated the uncertainty facing the sector, forecasting net profits for 2025 to range between $20 million and $100 million.

Canadian tanker owner Teekay confirmed a high level of uncertainty in the market, particularly when providing guidance for the 2025 markets.

The company highlighted challenges in predicting how conditions might evolve and the potential geopolitical impact on the oil tanker market.

Andrea Olivi, global shipping head at Trafigura, one of the largest oil and commodities traders headquartered in Singapore, observed increased caution among traders regarding long-term shipping contracts.

Olivi elaborated that uncertainties stem from not only tariffs but also the ongoing Ukraine war and shipping routes through the Red Sea.

Owners of tankers have seen profits grow over the past year largely as they have avoided the Red Sea due to attacks on commercial vessels.

However, prospects for returning to shipping through the Red Sea have emerged, as Houthis announced last month they would reduce their attacks following a ceasefire agreement in Gaza.

Olivi remarked that “any significant developments there will have a substantial impact on shipping prices,” adding, “a lot could happen in the next three to six months.”

Regarding tariffs, Teekay noted that potential U.S. tariffs against crude oil imports from Canada and Mexico could bolster certain shipping operations.

The company pointed out that these tariffs would likely increase maritime trade with other countries while pushing more Canadian and Mexican oil towards Asia, though U.S. tariffs against China could negatively impact Chinese demand for oil imports.

In the context of Ukraine, tanker owners are questioning how any peace agreement might reshape oil trade patterns.

Since the onset of the conflict in Ukraine in February 2022, Russian oil exports have been affected by a suite of sanctions imposed by the U.S. and other Western nations.

Jan Ilieman, head of ocean transportation at Cargill, observed that geopolitical uncertainties and trade route considerations have raised questions about the accessibility of ship fuel.

Recently, Cargill and Hafnia announced their intention to merge operations to supply bunker fuel, a move aimed at expanding business and providing customers with greater reliability and security regarding energy prices.

Despite anticipated market disruptions, Hafnia and other prominent tanker owners view the long-term outlook as positive.

They anticipate that the aging global fleet will likely remove ship owners from service, consequently tightening supply and driving up prices.

However, Sean Miller, co-head of oil tankers at SSY, based in London, cautioned that markets remain constrained by geopolitical uncertainties.

He noted that any meaningful return to normalcy will require resolving various ongoing political crises and subsequently analyzing the implications of such resolutions.

Until then, the shipping sector will continue to be subject to fluctuations.