As discussed in previous articles and reports, one of the defining drivers of the LR2 market in H2 2025 has been the transition from clean to dirty trading. Recent data show that this trend remains firmly in place as more than 50 additional LR2s are currently employed in the dirty trade compared to the start of the year. As a result, LR2 tankers trading in the dirty market have reached an all-time high.

However, with Aframax–LR2 earnings spreads now narrowing (according to Baltic Exchange), the obvious question arises: are the forces that triggered this migration still intact, or is the market approaching the point where LR2s start to “clean up” again? Shifts in tanker demand fundamentals indicate that the trend is peaking and an imminent reversal could likely be on the table.

Atlantic crude demand: the original catalyst

A key driver behind the switching activity has been the resurgence of mainstream Aframax-sized crude demand in the Atlantic Basin. This has been met with a record number of LR2s positioning within the region, seeking employment. At the same time, Greek operators have been exiting Russian trades and returning to mainstream routes following the latest sanctions on Russian entities, contributing to the flooding of dirty Aframax/LR2s in the Atlantic.

But what are the drivers of the rise in Atlantic Basin demand? Increased crude purchasing in the Pacific, the redirection of traditional Russian buyers toward non-Russian grades, and prolonged discharge delays have materially boosted employment for larger vessel classes, particularly Suezmaxes and VLCCs, on long-haul routes. This has also triggered a notable repositioning effect, as Suezmax tonnage in the Pacific is now at its highest level since the implementation of the EU ban on Russian crude in early 2023. With Suezmaxes largely absent from the Atlantic, Aframaxes have stepped in, capturing a growing share of intra-Atlantic trades, which is now at their strongest levels since summer 2022.

How durable is intra-Atlantic Aframax strength?

However, the sustainability of this Aframax strength could falter. One major factor has been robust PADD 3–Europe Aframax voyages, driven by ad valorem taxes that incentivise US producers to push barrels offshore. However, ad valorem-driven destocking tends to dwindle by year’s end, potentially capping US exports just as European refiners may increasingly source light-sweet crude from closer origins such as Libya, should civil disruptions remain contained.

Indeed, recent Aframax voyage data already show a shift toward nearby barrels (out of the Mediterranean and Northwest Europe) at the expense of longer-haul Atlantic routes. This shortens voyage distances and caps tonne-mile growth.
At the same time, a rebalancing of global crude departures and arrivals is gradually unwinding the historically high levels of oil on water seen earlier this year. As oil on water levels clear, availability of VLCCs and Suezmaxes should improve, potentially reintroducing competition on routes currently dominated by Aframaxes.

Clean tankers: fundamentals quietly firming

On the clean tanker front, LR2 earnings remain supported near summer 2025 highs, primarily due to tighter supply following the vessel migration into DPP and crude trades. The reason these earnings were not pushed materially higher is largely a vessel demand-side story. LR2 demand is heavily linked to Middle East exports, and a heavier-than-2024 refinery maintenance schedule in 2025 curtailed employment.

This is now beginning to reverse as refineries come back online. That said, European middle distillate demand remains soft, with a greater share of barrels likely to stay within the Pacific rather than moving westbound, ultimately limiting tonne-mile support.

However, where LR2s are finding unexpected support is in the naphtha trade (read more here). Favourable economics versus LPG for Asian steam crackers, coupled with pre-Lunar New Year buying, have pushed the share of Atlantic-to-Pacific naphtha flows to record levels. As a result, this is offsetting the shortfall from weaker long-haul West-to-East middle distillate voyages.

Taken together, these shorter-term demand shifts, alongside more structural factors such as unchanged Bab-el-Mandeb transit behaviour and the ongoing shift in refining capacity from the West to the East, point toward a gradual rebalancing of earnings between LR2s and Aframaxes, putting an halt to the frenetic pace of LR2s “dirtying up”.
Source: Vortexa