Middle East oil tanker freight spikes to five times pre-war levels

According to the International Energy Agency, freight rates for large oil tankers traveling from the Persian Gulf to Asia climbed to more than $37 per barrel by mid-October, a rise of over fivefold from pre-war levels. The escalation is linked to heightened congestion in the Strait of Hormuz, the diversion of trade routes and a growing reliance on ship-to-ship transfers, all of which have extended transit times and reduced fleet productivity.

As vessels spend longer on disrupted paths, charterers have shifted cargoes from VLCCs to smaller Suezmax and Aframax ships, driving a roughly 20% increase in demand for those classes compared with the previous year. Similar price spikes are seen on other routes: Suezmax freight from West Africa to Europe now exceeds $22 per barrel, and Aframax rates in the North Sea have tripled to over $6 per barrel. The surge has also spilled into the product tanker market, with owners deploying LR2 vessels for crude and LR1 rates from the Gulf to Japan reaching nearly $27 per barrel. These dynamics reflect broader inefficiencies and cost pressures in global oil shipping caused by the ongoing Middle East conflict.