We were still able to generate another $10 million operating cash flow in Q2 despite this, about the same as the first quarter with products. After booking April at a respectable $15,500 a day, rates fell through the $10,000 level and finished the quarter at operating cost breakeven levels.

Activity in Atlantic fell off as product pricing fell on weak pre-summer demand on both sides of the Atlantic, and the arbitrage window closed in both directions. As weak as the Atlantic was, the Far Eastern markets were even weaker. This prompted many Eastern owners to reposition vessels to the Atlantic basin where our MRs are focused. This added competition and a loss of rate discipline exacted a heavy price on our MR spot market. So after an encouraging start to the quarter, our MR has averaged just about $10,000 a day with crude.

The same pattern materialized in the larger crude classes as market players scrambled to build crude inventories before the Iran embargo kicked in on July 1. This was completed towards the end of May just as the typical pre-summer select was setting in. Then in June, the mishap of Motiva occurred, which took 10 to 15 VLCCs out of the AG-West trade. Suezmax spot rates followed VLCCs fairly closely, while Aframax activities remain subdued with spot rates similar to the past 12 months or so. Rates in International Crude and Products remain weak today.

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