A record high number of LR2s are now trading in the dirty market. While this shift first began to emerge in October 2025, the recent conflict has clearly accelerated the trend, with LR2 increasingly deployed into dirty trades as the market shows better economics.
The continued closure of the Strait of Hormuz has undoubtedly disrupted flows out of West of Hormuz, making it more difficult for crude and product cargoes to reach end buyers. Refiners that had relied on Middle East Gulf liftings are beginning to face crude supply shortfalls, with some run cuts now emerging, and several Asian countries are also starting to curb product exports. For LR2s, this has weakened core clean tonne-mile demand and reduced forward cargo visibility in the Pacific.
Against this softer clean backdrop, the silver lining is the speed at which the market is adapting. Part of the clean fleet is already repositioning away from the Pacific towards the Atlantic, where refinery runs remain healthy and product demand is proving more resilient. At the same time, strength in the dirty market, particularly in the Aframax segment, is creating an increasingly attractive alternative for LR2 owners. Our Anywhere Freight Pricing global basket index shows that Aframax earnings have outperformed clean LR2 returns, encouraging more owners to dirty up coated tonnage. This is an important support mechanism: while it does not replace lost clean demand directly, it removes surplus LR2 supply from the clean market, tightens effective availability, and provides a firmer earnings floor.
The impact of a Strait of Hormuz closure is particularly pronounced across the dirty tanker segments. The initial disruption first materialised in the VLCC market, where effective supply tightened as transit through the Strait became constrained. That tightening has since cascaded into the Suezmax and Aframax sectors. As ballasting vessels reposition towards alternative loading regions, longer ballast distances reduce prompt tonnage availability. At the same time, trade adjustments are resulting in some cargoes moving in smaller parcels, which is supportive of Aframax demand. Together, these dynamics are lifting both utilisation and earnings for Aframax vessels.
Looking ahead, waivers on Russian and Iranian crude should continue to underpin Aframax demand, as Indian and Chinese refiners remain active buyers of these barrels. However, the sharp drawdown in oil on water points to relatively quick discharge at destination, suggesting efficient vessel turnaround and adequate tonnage within this trade. As a result, these flows are supportive for Aframax utilisation, but have yet to create a meaningful additional pull from mainstream Aframax tonnage.
Overall, clean LR2 fundamentals have come under pressure as the conflict has disrupted cargo flows and reduced tonne-mile demand from West of Hormuz. This has reinforced the trend of LR2s moving into dirty trades. As long as Aframax earnings remain sufficiently strong to attract coated tonnage, this cross segment supply reshuffling should continue to limit downside for LR2 owners and keep the market supported.
Source: Vortexa
