The tanker market is currently facing turbulence due to the escalating conflict between Iran and Israel. According to Gibson, there is a possibility that Iran may attempt to close the Straits of Hormuz, a critical chokepoint for global oil trade. Although a prolonged closure is deemed unlikely, such an action would have dire consequences for the daily transit of approximately 20 million barrels per day of crude oil and products. This volume cannot be easily replaced or redirected through alternative channels.
While tanker rates might experience a temporary spike following a closure, the longer-term implications could lead to a decline in cargo availability and increased energy prices affecting the global economy. In a more plausible scenario, Iran may seek to disrupt shipping activities in the region through limited attacks, hijacking, or harassment of passing vessels. This could result in a reduced willingness among shipowners to transit the area, thereby increasing freight costs for exports through Hormuz. Additionally, there may be an uptick in demand for crude oil from safer loading zones, particularly in the Atlantic.
High oil prices could also help revive declining U.S. production. While Middle Eastern exports may remain stable under this scenario, other global producers could see benefits, which may translate into improved freight rates. Iran might leverage allied groups like the Houthis to intensify attacks on shipping in the Red Sea and target Israeli interests. However, the actual capacity of the Houthis to conduct such attacks is uncertain, particularly in light of recent U.S. efforts to weaken their capabilities.
As a result, increased caution is expected among vessels operating in the Red Sea, with UK-flagged ships issued warnings against navigating the area. The situation may also prompt a reassessment of diplomatic options, although the window for effective negotiation seems to be closing. The U.S. could intensify sanctions on Iran to further limit its export revenues. Future developments, including Israel’s intentions and Iran’s potential responses, will become clearer in the coming days.