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Investing.com - OPEC+ has been unwinding its voluntary production cuts at a faster rate than it had previously outlined, although this has yet to translate into a noticeable change in volumes on very large crude carriers, according to analysts at Jefferies.
Since April, the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, has either made or announced output upticks totalling some 1.37 million barrels per day, or 62% of the 2.2 million of the total amount of supply it plans to put back into the market.
Strategists have suggested that these countries, which include producers like Saudi Arabia and Russia, are attempting to recapture some market share during a time of broader economic uncertainty stemming from global trade tensions and an ongoing transition to greener fuel sources.
At its May meeting, OPEC+ confirmed that it will raise its quota by 411,000 bpd for July, roughly equivalent to three monthly output increases and the same as May and June, the HSBC analysts said in a note to clients on Friday.
Yet these plans for increased production have yet to turn into higher OPEC+ exports, a trend which, combined with weaker U.S. crude shipments, has led to softer spot rates for very large crude carriers, the Jefferies analysts said. Known commonly as VLCCs, these tanker ships are designed to transport crude oil.
In a note on Friay, the Jefferies analysts flagged that VLCC spot rates have slipped to just below $30,000 per day, falling below their February-May range of $40,000 - $60,000 a day.
However, the strategists said the outlook for VLCCs grows stronger as the fourth quarter of 2025 approaches, adding that the wider tanker industry is likely to benefit from OPEC+ volumes turning into actual exports later in the year.
"We remain positive on the prospects for the entire tanker sector as a stronger VLCC market normally lifts all segments, including product carriers. But for now, the upswing seems likely to take just a little while longer," the Jefferies analysts said.
Should this the increase transpire, the analysts expect the trend to benefit tanker groups like Frontline (NYSE:FRO) and DHT (NYSE:DHT).