Oil shipping rates are experiencing downward pressure as seasonal demand weakens following a period of significant volatility in the tanker markets. With a fragile ceasefire between Iran and Israel in place, tanker operators have begun to return to normal trading patterns.
This shift comes after Israel conducted airstrikes against Iranian targets, including nuclear sites and energy infrastructure, which prompted a series of retaliatory actions before a truce was brokered on June 23 after 12 days of conflict. The benchmark very large crude carrier (VLCC) rate for transporting 270,000 metric tons of crude from the Persian Gulf to China surged from $9.95 per metric ton on June 12 to a 16-month high of $20.46 on June 24, before plummeting to $11.72 just days later.
This volatility extended to other shipping markets, including Suezmax and clean LR2 categories, which also exhibited considerable fluctuations. Analyst Nikesh Shukla from S&P Global Commodity Insights indicated that seasonal factors are likely to exert pressure on shipping rates through the end of the third quarter, barring any renewed escalations in regional tensions.
Although both Iran and Israel have alleged breaches of the ceasefire, they have largely restrained from instigating further large-scale confrontations, as indicated by improved ship-tracking data showing increased willingness among tanker operators to navigate the region. On June 26, 729 unladen tankers were signaling destinations in the Gulf’s oil-exporting nations, an increase from a low of 717 on June 14.
Additionally, the number of operational tankers rose from 367 to 408 during the same timeframe. Notably, the number of tankers waiting to dock decreased, suggesting reduced congestion in the Strait of Hormuz.
Despite the easing conditions, operational risks remain due to electronic interference affecting satellite navigation systems. Gulf states have reportedly intensified the use of GPS jammers for military defense, which may jeopardize navigational safety for maritime traffic.
Major operators like Hafnia are keeping a close eye on developments in the Middle East, ensuring adherence to updated security protocols. Traditional navigational methods may be employed in response to these challenges, as highlighted by EU naval command observations.
Nonetheless, companies have mostly navigated these complexities without major incident, with recent reports indicating a potential collision near the UAE that may or may not be tied to electronic disturbances.