A record high number of LR2s are now circulating on the dirty market. While this shift first began to unfold in October 2025, the recent conflict has clearly accelerated the trend, with LR2 increasingly prevalent in dirty trades as the market shows better economics.
The ongoing closure of the Strait of Hormuz has undoubtedly disrupted flows from western Hormuz, making it more difficult for shipments of crude oil and products to reach end buyers. Refining companies that relied on Middle Eastern and Gulf shipments have begun to face a shortage in crude oil supplies, with some cuts now emerging, and many Asian countries have begun to limit product exports. For LR2 aircraft, this weakened the basic clean ton mileage demand and reduced forward cargo visibility in the Pacific.
Against this clean, softer backdrop, the silver lining is the speed with which the market is adjusting. Part of the clean fleet has already been repositioned away from the Pacific towards the Atlantic, where refinery operations remain good and product demand is proving more resilient. Meanwhile, strength in the dirty market, especially in the Aframax sector, is creating an increasingly attractive alternative for LR2 owners. The Global Basket Anywhere Freight Pricing Index shows that Aframax profits have outperformed clean LR2 returns, encouraging more owners to pollute plated cargo. This is an important support mechanism: although it does not directly replace lost clean demand, it removes excess supply of LR2 from the clean market, tightens efficient availability, and provides a more stable profit floor.
The impact of the Strait of Hormuz closure is particularly evident across dirty tanker compartments. The initial disruption was first evident in the VLCC market, where effective supply was tightened as transit through the Strait was restricted. Since then, this tightening has extended to the Suezmax and Aframax sectors. As ballast ships are repositioned toward alternative loading areas, longer ballast distances reduce the immediate availability of cargo. At the same time, trade adjustments have resulted in some shipments being moved in smaller parcels, supporting demand for Aframax. Together, these dynamics drive up utilization rates and profits for Aframax vessels.
Looking ahead, waivers on Russian and Iranian crude should continue to support demand for Aframax, as Indian and Chinese refiners remain active buyers of these barrels. However, the sharp decline in oil on water indicates relatively rapid unloading at destination, indicating efficient vessel turnover and sufficient tonnage within this trade. As a result, these flows support the use of Aframax, but have not yet created meaningful additional drawdowns from the prevailing Aframax load.
Overall, LR2’s clean fundamentals came under pressure as conflict disrupted cargo flows and reduced tonne-mile demand from West Hormuz. This has reinforced the trend of LR2 moving to dirty deals. As long as Aframax earnings remain strong enough to attract plated tonnage, reallocation of supply across segments should continue to limit downside for LR2 holders and maintain market support.
Source: vortex
