Tanker rates soar to this year high as Middle Eastern tensions escalate
Tanker spot rates on key Middle East export routes have surged to their highest levels this year on June 23 amid a sharp escalation in regional tensions in the Middle East.
Over the weekend, the US conducted targeted airstrikes on three Iranian nuclear facilities, triggering retaliatory missile attacks by Iran on a US military base in Qatar on Monday. That evening, President Trump called for a ceasefire between Israel and Iran. Israel agreed to the proposal, citing military success in Iran and subsequently reopening its airspace, according to a statement from Prime Minister Netanyahu’s office. However, just two hours later, Israel’s Defence Minister ordered a forceful military response after detecting missile launches from Iran toward Israeli territory—an accusation Tehran denies.
Freight rates surged across all tankers out of the Middle East. VLCC rates on the benchmark TD3C (MEG–China) route spiked 65% week-on-week to $75,900/day on Monday, up from $45,900/day. Product tankers also saw significant gains: LR2 TC1 (MEG–Japan) rose to $56,400/day from $23,400/day over the same period. LR1 TC8 (MEG–UKC) climbed to $46,900/day, doubling from $22,000/day. MR TC17 (MEG–East Africa) nearly doubled to $44,600/day from $24,000/day.
TD3c BalMo hit a peak of WS100 following Israel’s strike on Iranian nuclear infrastructure, up sharply from WS49 pre-conflict. However, with the Strait of Hormuz now appearing stable, rates have eased back to WS92.5 on Monday. The forward curve has also corrected swiftly — July contracts dropped from a high of WS79 to WS66 within hours, while Q3 softened from WS65.5 to below WS62 on Monday.
The surge in geopolitical risk has not been limited to the VLCC segment. TC5 paper also rallied strongly, with BalMo assessed at WS240 on Monday compared to WS136 before the conflict. July traded as high as WS210 but has since retreated by around 10 points. Q3 remains inactive, with the last reported deal in the WS130s.
Brent price jumped as much as 5.7% to $81.40 per barrel on Monday — the highest since mid-January — before tumbling 5% towards $68 per barrel today.
Charterers have taken a step back ever since the Israeli attacks on Iran, resulting in a few fixtures to rely on to assess the markets. Chinese COA seem to be business as usual despite the geopolitical turmoil in the Middle East. Owners have managed to push up fixing levels to WS110-120 for MEG/East and put traders on guard to discuss internally on trying to defer stem dates or get cargoes delivered to avoid the hefty freight payment. Owners are demanding charterers' management approval to be lifted within 24 hours or less to try and safeguard the subjects on the fixture, and have managed to get away in most cases. However, some of the fixtures with higher rates have been failing, which is also coincidental considering the temporary ceasefire between Israel and Iran.
Additional war risk premium (AWRP) increased by 0.025%, an overaged VLCC was on subjects today, has its AWRP at 0.1875% of the VLCC’s Hull and Machinery value (approx. $88,000), compared to 0.15% pre-Israel attacks.
So far, no owner has explicitly declared a refusal to enter the region, as doing so would eliminate them from consideration for any Arabian Gulf cargoes. According to Vortexa, oil flows through the Strait remain uninterrupted, with tankers continuing normal transit, although there are at least five tankers that have u-turned out of the Straits of Hormuz following the US strikes in the early hours of June 22.
Iranian crude on water has reached a new high at 124m b/d as of today this month, from 107m b/d last month. Iran’s oil exports have jumped to 1.65m b/d so far in June, compared to 1.34m b/d in May although the nation came under attack from Israel. Iran seems to be trying to get as many barrels as it can out from Kharg Island, home to a cluster of storage tanks that are critical to Iran’s crude exports.
Greece, which controls the world’s largest oil tanker fleet, issued a formal advisory urging shipowners to reconsider transits through the Strait of Hormuz and delay voyages in nearby safe anchorages on Sunday. The Greek shipping ministry specifically cited the risk of a potential closure of the strait and advised vessels to adopt the highest security level and maintain maximum distance from Iranian waters.
The Joint Maritime Information Centre (JMIC) and EU naval forces have raised the threat level for US- and Israeli-linked commercial vessels, particularly in the Red Sea and Gulf of Aden, where proxy threats remain elevated.
While the market has not yet seen physical oil disruptions, the threat of Iranian retaliation — whether through direct military action, proxy activity, or efforts to close Hormuz — remains a key risk. Any deterioration could result in disruptions at key terminals such as Kharg Island, even higher insurance premiums and war risk surcharges.