New orders for oil tankers have plummeted by 86%, reaching a nine-year low.

According to the latest "Shipping Number of the Week" released by BIMCO, in the first eight months of 2025, the new shipbuilding contract volume for oil tankers dropped sharply by 86% year-on-year, reaching only 2.6 million deadweight tons (DWT), marking the lowest level in nine years.

The prosperity of 2023-2024 came to an abrupt end. 

This decline contrasts sharply with the boom in such ship orders over the past two years. In 2023 to 2024, LR2 and MR ship types were the main sources of orders, and the recovery of LR1 was also notable. In November 2024, the order volume of oil tankers reached 42.2 million deadweight tons, the highest point since 2008. However, since the beginning of 2025, the order book has shrunk by 12%, and the current total has dropped to 37.2 million deadweight tons. 

Among them, LR2 accounted for 48%, MR accounted for 37%, LR1 accounted for 13%, and the rest were flexible vessels. Although the decline in MR was relatively smaller, it still decreased by 76% year-on-year, indicating that all sub-markets have experienced significant contraction. 

A large volume of deliveries will increase the pressure on transportation capacity. 

Although new orders have dropped sharply, BIMCO stated that the large order book still implies a concentrated delivery in the next two years. BIMCO pointed out that this will further put pressure on freight rates and accelerate the dismantling of old ships. 

The fleet of oil tankers has gradually aged since 2011, with the average age of the vessels reaching 14 years currently. Due to the low rate of recycling and dismantling in recent years, 20% of the existing capacity of the fleet comes from vessels with a ship age of over 20 years. Based on historical trends, the potential for dismantling could reach 10% of the current active fleet. There is great potential to control the growth of the fleet through dismantling in the future. 

The penetration of alternative fuels 

In terms of green transformation, currently, approximately 11% of the new ships in the order book are capable of using alternative fuels upon delivery, and another 22% are designed to be retrofitted in the future. Among them, 90% are powered by LNG, and the rest by methanol. This indicates that the green upgrade of oil tankers has entered a substantive stage, but the proportion is still relatively limited. 

Long-term demand outlook under pressure 

Gouveia stated: "In the near term, product tanker contracting is likely to remain low due to the large order book and the weak outlook for long-term demand (Given the large backlog of orders and the weak outlook for long-term demand, the new shipbuilding contracts for product tankers are likely to remain at a low level in the short term)." 

The prediction of the International Energy Agency (IEA) indicates that global demand for refined oil products may still show a slight increase in the short term, but it is expected to reach its peak by 2027. As the popularity of electric vehicles accelerates, the decline in demand for gasoline and diesel will outpace the growth of naphtha and aviation kerosene, putting pressure on the long-term demand for refined oil transportation. 

The new shipbuilding market for oil tankers is undergoing a dramatic reversal: In the short term, the competition between the large-scale delivery of new ships and the aging and dismantling of existing fleets will determine the supply and demand pattern of the market; in the long term, the energy transition and changes in consumption patterns will shape the future fate of oil tankers.