Freight markets spiral as LNG tanker rates top $200,000 a day and VLCC costs hit records amid fears of disruption in the Strait of Hormuz
A sharp escalation in the US–Iran conflict has upended global energy shipping markets, with liquefied natural gas (LNG) tanker rates in the Atlantic Basin more than doubling within hours and crude supertanker costs in the Middle East surging to all-time highs.
Shipowners and brokers are now seeking upwards of $200,000 per day for LNG carriers in the Atlantic, roughly twice the levels quoted less than 24 hours earlier, according to a report by Bloomberg News.
The sudden spike follows Qatar’s decision to halt LNG production as the conflict with Iran spilled across the wider Gulf region, tightening vessel availability and triggering a scramble among charterers to secure tonnage.
Hormuz disruption rattles markets
Shipping activity through the Strait of Hormuz — the narrow waterway between Iran and Oman that carries around one-fifth of the world’s oil consumption and significant LNG volumes — has slowed dramatically after vessels in the area were reportedly targeted amid Tehran’s retaliation to US and Israeli strikes.
An Iranian Revolutionary Guards official told local media the Strait had been closed and that any vessel attempting to pass would be fired upon. However, the United States Central Command said the waterway remained open despite the threats.
The uncertainty has been enough to roil freight and energy markets. Brent crude futures have climbed nearly 10 per cent this week, reflecting concerns over supply disruptions across the Middle East.
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VLCC rates hit record
The benchmark TD3 rate — which tracks very large crude carriers (VLCCs) transporting 2 million barrels of oil from the Middle East to China — soared to Worldscale 419 on Monday, equivalent to about $423,736 per day, according to LSEG data. That marks a doubling from Friday’s levels and extends gains from a six-year high recorded last week.
Industry participants say the spike reflects both immediate security concerns and a withdrawal of tonnage from the Gulf, as shipowners reassess risk exposure and insurance costs.
In retaliation for US and Israeli strikes that reportedly killed Iran’s Supreme Leader Ayatollah Ali Khamenei, Tehran has launched attacks on Gulf targets, prompting precautionary shutdowns at several oil and gas facilities in the region.
LNG shipping under strain
While crude freight rates have grabbed headlines, LNG shipping is also under acute stress.
According to Spark Commodities, Atlantic LNG freight rates jumped 43 per cent on Monday to $61,500 per day, while Pacific rates rose 45 per cent to $41,000 per day. However, market participants said forward offers and private negotiations in the Atlantic were now pointing to levels above $200,000 per day, underscoring the speed and severity of the repricing.
Fraser Carson, principal analyst for global LNG at Wood Mackenzie, said spot LNG shipping rates could breach $100,000 this week as vessel supply tightens further.
“Vessel availability for the rest of March is considered weak as cargo operators work through the backlog created by weather disruptions in February,” Carson said. “There will be very strong competition for any available vessels.”
Until safe passage through Hormuz can be assured, many vessels are expected to remain idle or seek alternative routes, further squeezing supply.
Asian shippers on alert
Asian governments and companies have begun issuing advisories. South Korea’s maritime ministry has asked domestic shippers with vessels in the Middle East to refrain from operating in the region and is convening meetings to assess further safety measures.
Shipping firm Hyundai Glovis said it was preparing contingency plans, including securing alternative routes and ports, in response to the escalating conflict.
With the Gulf accounting for a critical share of global oil and LNG exports, a prolonged disruption could amplify energy price volatility and fuel inflationary pressures worldwide. For now, the freight market is signalling one thing clearly: geopolitical risk in the Gulf has returned with force — and at a steep cost.
With inputs from agencies.
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