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Since late February, the US–Israel confrontation with Iran has moved from a high-risk backdrop to an operational shipping event

Since late February, the US–Israel confrontation with Iran has moved from a high-risk backdrop to an operational shipping event, with Hormuz transits have not been "formally" closed in a legal sense, but the Strait is increasingly treated as non-viable by large parts of the commercial fleet. The scale of the disruption is extraordinary. Based on Singal Ocean data, on Friday 6 of March, around 325 bulkers and 146 tankers are currently trapped inside the Middle East Gulf, including roughly 40 VLCCs, about 4% of the global VLCC fleet, alongside nearly 38 MR2 and 19 MR1 and about 80 Kamsarmax/Panamax vessels, 70 Ultramax/Supramax and 60 Handysize vessels. The Gulf normally handles close to 15–16 million barrels per day of crude exports, equivalent to roughly one-third of all seaborne crude and nearly one-fifth of global oil supply. With the chokepoint effectively shut, the tanker market has reacted with explosive force. Based on Baltic Exchange TCes, indicative VLCC earnings have surged beyond $314,000 per day, with some market chatter suggesting fixtures on Middle East–Asia routes approaching $440,000 per day and theoretical levels even higher. These numbers dwarf previous spikes, including the 2019 peak of roughly $307,000 per day, and illustrate how violently freight markets react when physical logistics are disrupted at scale.

Yet paradoxically, the market is not simply booming – it is partially frozen. Owners are reluctant to commit tonnage without clarity on security and insurance, while charterers struggle to evaluate risk exposure. The insurance market has become a critical bottleneck. War risk premiums for Gulf voyages have reportedly jumped from roughly 0.1% of hull value to around 1%, while several insurers have temporarily withdrawn cover for Hormuz transits altogether. Without war risk cover, most mainstream shipowners cannot legally operate in the region. This sudden tightening of insurability is arguably the single most important constraint shaping near-term freight dynamics. The consequences are rippling through energy markets. Brent crude jumped sharply toward $105 per barrel from the start of March, while gas markets reacted even more violently after Qatar temporarily halted production at Ras Laffan following a drone strike. Qatar accounts for roughly 18% of global LNG supply, and the loss of these volumes overnight has dramatically reshaped LNG freight expectations, with Atlantic basin LNG carrier rates reportedly moving above $100,000 per day. At the same time, Asian importers are scrambling to secure alternative barrels, which could significantly increase tonne-mile demand if flows shift toward US or Atlantic basin suppliers. While tanker markets are the immediate epicentre, the disruption extends across the wider shipping ecosystem. Roughly 5% of global dry bulk tonne-miles originate from the Persian Gulf, particularly fertilisers and petrochemical feedstocks, meaning any sustained closure will inevitably create friction in bulk trades. Historically, such friction tends to support freight by reducing effective fleet supply, especially when combined with higher bunker prices that encourage slower steaming.

For now, the key variable is duration. Shipping history offers sharply contrasting precedents: the 1967 closure of the Suez Canal triggered a multi-year tanker boom, while the 1973 oil crisis ultimately destroyed demand. If the Hormuz disruption proves temporary, the immediate effect could be strongly supportive for tanker earnings and asset values. But if the conflict evolves into a prolonged regional war, the risk shifts from supply shock to macroeconomic damage. In shipping, the difference between those two outcomes is the difference between a freight windfall and a demand collapse.

S&P Activity:

Dry:

On the Capesize sector, the "CAPE SANDRA" - 176K/2011 HHIC was sold for USD 32 mills basis SS/DD due. Moving down to the Kamsarmax segment, the "NORD AURIGA"- 82K/2020 JNS was sold for USD 32 mills, while the "SPIRIT OF HO-PING" - 82K/2011 Tsuneishi changed hands for USD 19.35 mills. In the Supramax segment, the sister vessels "GENCO PREDATOR" - 55K/2005 NACKS and "GENCO PICARDY" - 55K/2005 NACKS were sold enbloc for USD 21 mills each. Activity was also noted in the Handysize sector. The "NORD SANTIAGO" - 39K/2018 JNS was sold for USD 22 mills, while the "ACTION TRADER" - 39K/2017 JNS was also sold for USD 20.5 mills. Furthermore, the "SIDER ATHENA" - 39K/2013 Chengxi changed hands for low/mid USD 17 mills. In the same size range, the "DL LAVENDER" - 35K/2014 SPP was acquired by Greek buyers for USD 15.8 mills. On the same sector, the Logger and Semi-boxed "MANGUSTA" - 33K/2015 Shin Kochi was sold for USD 16.7 mills. The "KEN GIANT" - 28K/2009 Imabari changed hands for USD 8.6 mills.

Tanker:

On the Aframax sector, the "GREEN ATTITUDE" - 113K/2018 Cosco found new owners for USD 71 mills. In the same size range, the "VOLTA RIVER" - 106K/2007 Tsuneishi was sold for USD 33 mills. On the MR2 sector, the sister vessels "STI OSCEOLA" - 50K/2015 HMD and "STI SENECA" - 50K/2015 HMD were sold for USD 35 mills each. Finally, on the small tanker segment, the "ASIA EVERGREEN" - 14K/2012 Fujian Shenglong was sold for excess USD 9 mills.

Xclusiv Shipbrokers Inc.