The military escalation between the USA, Israel and Iran has had a massive impact on oil and gas transportation through the Strait of Hormuz.
After Tehran threatened to close the strait, traffic between Iran and Oman came to a standstill. Around 20% of the world’s oil consumption and significant quantities of LNG pass through the strait.
Rates on the tanker market reached historic highs. For Very Large Crude Carriers (VLCC) on the “TD3” route from the Middle East to China, the worldscale value rose to WS 419, corresponding to around $ 423,736 per day, according to LSEG. This means that revenues have more than doubled within just a few days.
Massive increase of rates in the LNG segment
Rates in the LNG segment are also rising massively. After Qatar halted its production as a precautionary measure, spot rates for LNG tankers rose by 43% to $ 61,500 per day in the Atlantic on Monday, according to Spark Commodities. In the Pacific, they increased by 45% to $ 41,000 per day.
Market observers assume that spot rates could exceed the $ 100,000 per day mark in the short term. The availability of tonnage for the rest of the month is already considered to be tight. In addition to the geopolitical risks, weather-related delays from February, which have led to a backlog of cargoes, are also having an impact.
As long as a safe passage through the Strait of Hormuz is not guaranteed, part of the fleet is likely to remain in a waiting position. Several market participants are reporting “frozen” contract negotiations and considerable uncertainty in the valuation of new contracts.
Additional uncertainty is caused by contradictory information on the situation in the strait. While Iranian authorities are talking about a closure, the US Central Command (Centcom) has stated that the passage is still open. South Korea called on national shipowners to suspend business in the region for the time being. (JWY)
