Tanker Rates Top $1 Million a Day as Iran War Tightens Hormuz
Freight rates for crude tankers through the Strait of Hormuz have crossed $1 million a day for the first time, as the Iran war raises risks and insurance costs.
The cost of chartering a large crude carrier from the Persian Gulf to China has crossed $1 million per day for the first time, as the war with Iran drives up risks and disrupts traffic through the Strait of Hormuz.
Baltic Exchange data put the rate on the route at $1.035 million per day this week. Before the conflict, the same voyage cost about $208,000 per day on the Platts VLCC index — a roughly fivefold increase.
Commercial traffic through the strait has fallen sharply as the war enters its seventh month. At the same time, restricted supplies have pushed crude prices back above $100 a barrel, increasing the urgency of moving oil out of the Gulf.
Risk and insurance
Analysts attribute the spike primarily to risk. Two tankers were struck by projectiles in the Strait of Hormuz on Friday, underlining that commercial vessels remain prime targets.
Insurance premiums have climbed in tandem, reaching about 10% of the assets aboard from roughly 0.5% to 1% before the war. Those costs are being passed on to charterers.
Fewer vessels are willing to transit the more disrupted eastern side of the strait, tightening available capacity. Some maritime companies, meanwhile, are expanding their fleets to secure cargo deliveries and strengthen their supply-chain position.
Who pays, who profits
The bill ultimately lands with refiners, who face both higher freight and costlier crude, while alternative routes take longer. Pressure on refinery margins can feed through to consumers — diesel prices have crossed $6 for the first time, about 60% above pre-war levels.
Shipping companies are the clear beneficiaries. Clarksons, the world's largest shipbroker, reported record earnings in the latest quarter, including a 55% year-on-year rise in operating profit. Shipping-focused investors have also gained, with the Breakwave Tanker Shipping ETF up more than 3,600% year to date.
"Every time there's more geopolitical instability that creates trading inefficiencies, it's the shipping players that actually benefit," said Ioannis Papadimitriou, principal freight analyst at Vortexa. "And this time is no different."