The global oil market is facing a challenge that goes beyond crude supply. The new challenge is to find enough available ships to move it. Despite the recovery in Middle Eastern exports during September, geopolitical tensions and disrupted shipping patterns continue to put pressure on tanker availability. The result is an exceptionally tight freight market, where the ability to transport oil has become almost as important as the ability to produce it.
A fleet under pressure
Middle Eastern crude exports averaged 18.3 million barrels per day on September 30, exceeding pre-war levels, according to provisional Kpler data. However, the recovery in exports has not translated into a return to normal shipping conditions. Increased ship-to-ship (STS) transfers outside the Strait of Hormuz, longer waiting times and security concerns continue to absorb valuable tanker capacity.
The situation has become more challenging following a renewed wave of attacks on commercial vessels. According to the Financial Times, 24 ships were attacked in the two weeks leading up to October 11, while oil exports through Hormuz fell to approximately 2.9 million barrels per day on October 11, compared with a September peak of 15.5 million barrels per day.
These developments have made owners increasingly cautious about sending vessels into the region, with several empty VLCCs and Suezmaxes reportedly turning away from the Fujairah area. Uncertainty, waiting times and inefficient trading patterns reduce the effective availability of the global fleet.
Freight Rates: A Divided Market Amid Exceptional Earnings
According to the latest Breakwave shipping report, the tanker market is showing increasing differences between regions. While VLCC earnings in the Arabian Gulf remain exceptionally strong, freight rates elsewhere have started to retreat. Outside Hormuz, the recent correction reflects weaker cargo enquiries and reduced export volumes rather than an improvement in vessel availability. In the Atlantic, slower West African activity and lower US Gulf rates have also taken some momentum out of the earlier rally, although Brazil remains relatively active.
Meanwhile, VLCC freight futures on the Arabian Gulf–China route have come under pressure amid discussions about potential US sanctions relief for selected shadow-fleet tankers. However, no meaningful increase in commercially available tonnage has been confirmed. With continued security incidents around Hormuz and transportation and insurance costs reportedly exceeding one-third of commodity value, the recent easing in freight rates should not yet be interpreted as a return to normal market conditions.
What comes next?
In the near term, geopolitical developments will remain the main driver of tanker market conditions. Continued security threats around Hormuz are likely to keep transportation costs elevated, while any sustained improvement in regional stability could gradually ease logistical constraints and release capacity back into the market. For now, however, there is little evidence of a meaningful normalization in vessel availability.
The wider oil market also remains tight. Global inventories have fallen by approximately 1.7 billion barrels since the beginning of the war, according to Breakwave's latest report. Despite improved transits through the Strait of Hormuz, depleted inventories, elevated refined product prices and ongoing geopolitical uncertainty continue to support oil prices. While high prices may persist in the near term, the longer-term risk of demand destruction remains significant as consumers and refiners face increasing costs.
Looking further ahead, the surge in freight earnings has encouraged significant newbuilding activity. While additional vessels will eventually expand the global fleet, new capacity takes time to reach the water. The risk is that deliveries coincide with an improvement in geopolitical conditions, creating a very different supply-demand balance and potentially putting pressure on freight rates.
For now, the tanker market remains caught between exceptional freight opportunities and growing geopolitical uncertainty. The direction of the next market cycle will depend not only on how much oil is available, but also on how safely and efficiently it can be transported.