We remain confident that petroleum consumption will continue to grow strongly in Vietnam, even with the increasing penetration of electric vehicles. According to the Ministry of Industry & Trade (MoIT), petroleum consumption grew 4% YoY in 8M 2024. We project Vietnam’s petroleum consumption to grow at a 4.1% CAGR in 2023-2028F. This rate is ten times the International Energy Agency’s projected CAGR of 0.4% in global consumption in the same period. Strong petroleum consumption drives higher transport volume for tanker companies.

The tanker sector has seen a structural shift since 2022 with the Russia-Ukraine conflict. In 2024, the BDTI, a proxy for crude oil tanker spot rates, declined modestly ~5% YoY, but remains 1.7x higher than in 2021 (pre-Russia-Ukraine conflict levels). The BCTI, a proxy for refined oil product/chemical tanker spot rates, saw a 2% YoY increase in 2024 and is ~1.5x the pre-conflict level. The higher rate levels are further fueled by Red Sea tension that began in late 2023. Aframax (benchmark for crude oil transport), Medium Range (benchmark for oil product transport) and Handymax (benchmark for chemical transports) increased 3%/4%/11%, respectively, in 2024. 

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