WEB DESK: Global energy shipping markets were thrown into turmoil after Iran threatened to shut down the Strait of Hormuz, sending tanker rates and fuel prices sharply higher while governments urged vessels to avoid the region.
The narrow waterway between Iran and Oman handles roughly 20% of the world’s oil supply along with major volumes of liquefied natural gas (LNG). Traffic through the passage has slowed dramatically after Iranian forces reportedly targeted ships in response to US and Israeli strikes.
Supertanker rates hit record levels
Freight costs for very large crude carriers (VLCCs) capable of transporting about 2 million barrels of oil surged to historic highs. The TD3 benchmark route from the Middle East to China climbed to Worldscale 419, equivalent to more than $420,000 per day, according to industry data. The rate has more than doubled in just days amid escalating hostilities.
Oil markets reacted immediately. Brent crude rose nearly 10% this week as traders priced in the risk of prolonged supply disruptions across the Gulf.
Iranian media cited a Revolutionary Guards official as declaring the Strait closed and warning that any vessel attempting passage would be targeted. However, the US military’s United States Central Command said the waterway remained open despite the threats.
LNG shipping costs also spike
The impact has extended to gas markets. LNG freight rates jumped more than 40% after Qatar suspended production as a precaution.
According to pricing agency Spark Commodities, Atlantic LNG shipping rates climbed to $61,500 per day, while Pacific rates rose to $41,000 per day. Analysts warn spot prices could exceed $100,000 per day if vessel shortages intensify.
Fraser Carson of Wood Mackenzie said limited vessel availability already strained by February weather disruptions is creating fierce competition for ships. Until security through Hormuz is guaranteed, many vessels are expected to remain idle.
Governments and firms respond
Several shipowners have suspended Gulf operations indefinitely, making it difficult to determine sustainable rate levels.
In Asia, Hyundai Glovis said it is preparing contingency plans, including exploring alternative routes and ports.
Meanwhile, South Korea’s maritime ministry has advised national shipping firms to avoid operating in the Middle East for now. Officials are convening emergency discussions on additional safety measures following Iran’s warning that it would attack ships attempting to transit the strait.
With uncertainty deepening and tensions unresolved, global energy supply chains remain on edge as markets assess how long the disruption may last.
