VLCC (Very Large Crude Carrier) earnings for voyages from the Persian Gulf to China have surged to $624,388 per day, with the Persian Gulf to Singapore route reaching an even higher $628,564 per day. This extraordinary increase is attributed to the ongoing Iran war and the associated security risks in the Strait of Hormuz, making owners and crews reluctant to operate in the region. The Baltic Exchange's composite VLCC TCE (Time Charter Equivalent) reached $329,360 per day on August 24, indicating a generally strong market, but with a stark geographical divide where the highest returns are concentrated on the risky Persian Gulf export routes.
The scarcity of vessels willing to undertake high-risk voyages has led to a significant premium, with companies like South Korea's Sinokor Merchant Marine securing exceptional rates. In one instance, Sinokor fixed the Angola Prosperity for a mid-August loading in the Middle East Gulf to China National Offshore Oil Corporation (CNOOC), generating an estimated $510,604 per day. This fixture came close to the historical record of $527,000 per day and immediately reset expectations in the Middle East VLCC market, demonstrating that charterers are willing to pay for the increased risk.
The market is placing a premium on factors beyond nominal fleet capacity, including an owner's willingness to enter the region, the crew's ability to accept assignments, and the availability of war-risk insurance. Many ships are traveling "dark" without transponders, a tactic usually associated with sanctioned countries, to avoid detection. The United Arab Emirates has notably utilized such methods to maintain oil flows through the Strait of Hormuz. Spot returns contain a substantial "crisis premium," as evidenced by one-year VLCC assessments reaching $130,000 per day.
The surge in spot and period earnings is also impacting secondhand asset values. A 23-year-old tanker, the 299,000-dwt Hellstugutinden, with reportedly overdue surveys, recently sold for $57 million. Navios also committed approximately $362 million to three newbuildings, reflecting long-term capital bets on the market beyond 2028. The current market is characterized not by a shortage of ships globally, but by a severe shortage of vessels available, approved, and willing to navigate the high-risk conditions of the Persian Gulf.
