20th March 2015 IRAN’s THIRST

The debate on a possible deal over Iran’s nuclear program has once again raised its head above the parapets. Iran, having failed to meet any previous deadlines to conform with international demands to disclose details of its nuclear program, may be on the brink of brokering a deal with the US, to ease economic sanctions against the state. The Iranian government is anxious to seal a deal which could be concluded as early as the end of March. Iran is keen to resume crude oil exports as quickly as possible as the recent fall in the oil price has impacted heavily on their already limited ability to export crude. The nation is desperate to get back its pre-sanction market share as quickly as possible. International pressure has forced several nations to cut their dependency on Iranian imports, significantly India which has not taken any NITC VLCC cargoes since November last year.

Of course the impact of any such agreement could immediately release millions of barrels of crude currently being stored on the NITC floating VLCC flotilla anchored off the Iranian coast. Iranian crude released into the market, according to Reuters could potentially very quickly double the estimated global supply surplus. Fears over any resumption of crude production following any release from the shackles on Iran, can only push the oil price even lower which will

heap further pressure on all producers. However, following any initial surge in the release from floating storage, it is considered that Iran would be unable to resume pumping to anywhere near pre-sanction levels despite recent claims by the Iranian Oil Minister that exports could rise from existing levels, by 500,000 b/d within six months. In reality most analysts feel any immediate uptick in supply would be difficult to achieve given the lack of maintenance over the duration of the sanctions and the new investment required. Already several OPEC members have voiced their concerns as low oil prices continue to bite heavily into their revenues. According to one source, Venezuela, Nigeria, Iran and Libya have already requested the organisation to cut production to boost the oil price ahead of the next scheduled OPEC meeting in June. Other Non-OPEC producers have also come in with backing for this initiative and would not welcome the added imposition of increased Iranian production. So, any deal with Iran is not a ‘done and dusted’ deal as there are many players who have a vested interest to keep Iran outside of the fold, this will add more pressure on negotiations. Sanctions may also be lifted in stages which would again delay a quick resumption of crude exports. Restrictions on insurance, banking and other embargoed products remain in place. Since the beginning of February, we estimate that 15 NITC VLCCs are anchored off the Iranian coast believed to be employed in storage with another 9 units currently bound for China and 2 others destined for Korea. NITC are the largest individual owner of VLCC tonnage with 37 Units.

CRUDE

Middle East_________________________ A greater than anticipated March VLCC programme gave Owners some encouragement here, but that was quickly undone as discounted levels were seen for a preferred AG/South Korea voyage. Initial fears of a further slide were quickly abated though when reports of levels in excess of ws 50 on 270,000mt were seen, albeit for short Eastern voyages. Interest West kept to a minimum with last done being reported at ws 26.25 on 280,000mt via the Cape. Suezmaxes have been picked off on the first decade of the April programme, but all this has demonstrated is the flat nature of the market as there remains sufficient tonnage to keep rates at around 140 x ws 42.5 for voyages West and 130 x ws 87.5 for East. Aframaxes have seen some sustained enquiry this week and with a tighter Far East list, therefore constraining the amount of ballasters to the AG, we should see rates stay steady with a small chance of the rates threatening to move from 80 x ws 112.5 for AG/East.

West Africa_________________________ Suezmax tonnage has seen little activity this week and rate levels have continued to slide. By mid-week rate levels had softened to 130,000 mt x ws 85 for UKCont/Mediterranean discharge and the week ends with Charterers testing Owners resolve by trying to achieve lower rates. By early next week rate levels are likely to plateau and then we are likely to see more enquiry. Force Majeure being declared in PSVM Saturno (Angola) caused some disruption for Charterers here, with expected delays of around 8-10 days expected. The Initial dip in levels in the Middle East could have prompted VLCC levels to drop below ws 50 here, but as the AG rates recovered levels here would still be expected to be around 260,000mt x ws 51-52 level.

Mediterranean_____________________ The turn of the week began brightly for Aframax Owners. The heightened level of enquiry last week did not diminish and Charterers were drawn into fixing further forward and consequently at higher rates than last. A dearth of firm itineraries and slightly lengthening Turkish Strait delays led rates to increase from ws 105 to ws 125 by the close of the week for vanilla cross-Med movements. A discounted fixture with an excellent minimum flat was indeed achieved (ws 115) but the lay of the land is still firm on this side of the weekend. The gradual build up of Suezmax tonnage took its toll on the rates and we witnessed a gradual decline over the week. That said, rates are healthy for Owners given the continued low bunker prices that we are seeing. Longer haul out to the East is not as attractive as it has been but there are still sufficient vessels willing to go in that direction. We do not foresee much opportunity for rates to firm next week and any cargoes should attract considerable interest.

Caribbean_________________________ Aframax Owners continue to be on the back foot here as they try and halt the continual slide witnessed over the week. Last done 70,000mt x ws 135 looks repeatable now though as the steady flow of enquiry has given the list a tighter feel. VLCC levels inevitably took another hit here as Owners just led in the line hoping to be seen. Last done levels of $5.20 million for India were reported which should put Singapore at around $6.0 million.

North Sea___________________________ This week has seen a steady amount fixing for Aframxes in Baltic and some interest in the North Sea. With a lack of cargoes due to the larger ships swallowing up the stems, levels remained unchanged for North Sea, rates finishing the week where they started 80,000mt by ws 95. In turn the Baltic list constricted for the ice class which saw the end March and early April dated cargoes get tricky to cover, rates tick up slightly from 100,000mt by ws 77.5 to 100,000mt by ws 80. VLCC Arb levels fell further through the week putting it very nearly out of play for the majority of Owners here. Workable levels currently stand at around $4.35 million for Rotterdam to Singapore.

CLEAN PRODUCTS

East______________________________ A very steady week for the LRs in the East with little movement on rates. LR1s remain tight but with less enquiries it is fairly balanced. 55,000 mt Naphtha AG/Japan remains at ws 130 and 65,000 mt Jet AG/UKC at $2.35 million. LR2s looked a little weaker mid week but with a few more stems, quoting has stayed flat with 75,000 mt Naphtha AG/Japan at ws 105 and 90,000 mt Jet AG/UKC fixing at $2.50 million. A similar picture is expected going into next week. The MR market has seen a resurgence this week, with tonnage availability contracting. March dates have cleared out and early April is looking very tight, as a result further firming is expected. The new Yasref refinery has been pumping out stems off end March/early April dates. Consequently LR2s and MRs are being fixed away and the Red Sea has all but cleared out of vessels across the sizes and is very tight and freight levels are high. AG/Japan has firmed by 10 points to ws 120, East Africa although untested this week from the AG, should firm. RSea loading cargoes have been commanding a 10 point premium with 35 x ws 167.5 being confirmed RSea/EAfr. On AG/EAfr cargoes, Owners can expect to achieve similar levels if not more. AG/UKC has seen a $100,000 rise this week, from $1.35 to 1.45 million and other Owners are talking considerably higher. The X-AG market should see freight levels rise in excess of $300,000 for Kuwait/UAE and high 200's for Jubail/Jebel Ali. The immediate future for the MRs looks bright. It has been a busy week in North Asia as far as the MRs are concerned, Owners are looking to push for higher freight especially off prompt positions. However, the reality is that it has been a fairly balanced week and as trading draws to a close the Korea/Singapore backhaul market sits at around $ 580k with Korea/Australia around 35 x ws 160. The Singapore spot market is not as short on tonnage as it was last week and some of the firmness is ebbing away, cargoes into Australia are typically worth around 30 x ws 185-187.5, date dependent. LR1s in North Asia remain in short supply, creating the strange situation where backhauls on these units are more expensive than the LR2s. Despite this fact we have seen very little business concluded on either size this week and consequently ships are having

to fix fronthaul cargoes out of the AG forgoing any backhaul TCE contribution X-North Asia Mediterranean____________________ A subdued week in the X-Med market with drab enquiry levels and freight for 30kt stems softened to around 30 x ws 170 by the end of the week with less rumoured on subjects and not much left to be covered. Despite a quieter week the prompt list has remained relatively short so really cargo supply has been driving factor behind weaker sentiment this week. MRs have also suffered this week with Transatlantic now trading 37 x ws 155, and we consider WAfr around 37 x ws 175 and MRs in the Med deemed in line with the UKC. Despite a softened West longhaul market we are yet to witness an in market change in sentiment to fix East, Owners ideas arranged around $1.05-1.1 million for RSea + $100k for the AG Owner depending.

UK Continent_____________________ A steady and tight start to the week only kept rates firm for so long, with a sense of de-ja-vu from a couple of weeks ago, we soon saw fresh enquiry slow and Charterers were able push rates down to 37 x ws 155-160 by week end. The tonnage list is now looking longer and if enquiry stays this quiet into next week, rates could come under further pressure. West Africa re-aligns to 37 x ws 170-175 levels. The shorthaul market stays firm, with delays coupled with Charterers fixing far in advance leaving rates 30 x ws 215 / 22 x ws 210 X-Baltics. LR1s have had another quiet week although the list is still tight enough to keep rates 60 x ws 145 with more enquiry going East. Naptha has been in demand and now cleared the LR2 list leaving any March enquiry struggling to find coverage, although rates are holding $2.7-75 million Med/Japan.

Caribbean________________________ Slightly more activity in the USG this week sees TC14 firm slightly to 38 x ws 135 levels with the list well balanced. A steady end to the week as rates trend sideways and in general being arranged 38 x ws 125-135. Short haul into EC Mexico softens slighty to $575k levels, and the LR1s continue to firm on the back of a tight European market, 60 x ws 90-100 for USG/Transatlantic.

DIRTY PRODUCTS

Handy____________________________ In the North we should probably be talking about what was a testament to Owners resolve rather than the prevailing conditions they faced. For much of this week Owners have been up against, caused by a combination of inactivity and excess tonnage, Charterers clearly sensed that here was value to be extracted. This said, only towards the end of the week did we see the inevitable correction where we finish some 10 points softer against where the week began. In the Med too there was little reprieve for Owners, the list excessively long on tonnage, a correction was felt here a lot sooner compared with the North. This said, there does now appear to be a few green shoots of recovery as many of the units sat spot appear to have at least found some opportunity to look at. Should these vessels reach fully fixed status, we should be able to report a temporary halt on further decline.

MR______________________________ At the early stages of this week the decision process of taking part cargo opportunity was simplified, as value plummeted, any procrastination could have proven costly. As luck would present however, towards the latter stages of the week full cargo enquiry did present, and despite a negative correction to some of the softest numbers seen this year, Owners should be a little more confident of conditions to follow. Panamax_________________________ In recent weeks we have been looking at the disparity between daily earnings in the US versus what was achievable from the continent, where so extensive were the differences, something had to eventually give. Week 12 denotes such change, only this was to the detriment of US strength. At time of writing rates between the two regions can now almost reflect similarly, if it were not for the continent also having further value chiselled from it!

PAT/PCG/JD/DP/LHT

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wk on wk Mar Last Last FFAchange 19th Week Month Q1 15

TD3 VLCC AG-Japan -3 50 52 57 42TD20 Suezmax WAF-UKC -17 85 103 76 66TD7 Aframax N.Sea-UKC -1 95 96 98 95

wk on wk Mar Last Last FFAchange 19th Week Month Q1 15

TD3 VLCC AG-Japan -2,000 48,500 50,500 54,250 34,500TD20 Suezmax WAF-UKC -12,000 45,500 57,500 37,000 37,250TD7 Aframax N.Sea-UKC +1,000 24,500 23,500 25,000 23,500

wk on wk Mar Last Last FFAchange 19th Week Month Q1 15

TC1 LR2 AG-Japan +0 105 105 98TC2 MR - west UKC-USAC -20 156 176 138 89TC5 LR1 AG-Japan -0 130 130 99 115TC7 MR - east Singapore-EC Aus +8 188 180 171

wk on wk Mar Last Last FFAchange 19th Week Month Q1 15

TC1 LR2 AG-Japan +1,000 30,500 29,500 24,250TC2 MR - west UKC-USAC -4,000 24,000 28,000 18,750 8,250TC5 LR1 AG-Japan +750 28,750 28,000 16,250 23,250TC7 MR - east Singapore-EC Aus +3,250 24,000 20,750 18,5000

LQM Bunker Price (Rotterdam HSFO 380) -15 288 303 318LQM Bunker Price (Fujairah 380 HSFO) -23 318 340 385LQM Bunker Price (Singapore 380 HSFO) -20 306 326 375

(a) based on round voyage economics at 'market' speed

Dirty Tanker Spot Market Developments - Spot Worldscale

Dirty Tanker Spot Market Developments - $/day tce (a)

Clean Tanker Spot Market Developments - Spot Worldscale

Clean Tanker Spot Market Developments - $/day tce (a)