Filenews 18 June 2025
The Israeli-Iranian confrontation has entered a phase of open crisis, with the lightning-fast Israeli airstrike of June 13 bringing the geopolitical risk of the Persian Gulf from the sphere of indirect tension to the field of direct conflict. The immediate impact was the appreciation of Brent crude by almost 10% intrasession, to $76/barrel, but the strongest signals came from charters and war risk premiums.
Analysts at the shipping agency Xclusiv Shipbrokers report: "The Strait of Hormuz, technically remains open, but the behaviour of the charterers shows the opposite: the 21-nautical mile strait is now considered, in practice, semi-closed.
War risk premiums reveal the magnitude of the unrest. A direct VLCC Ras Tanura–Ningbo route, which on June 13 was insured at $0.25/barrel, was priced between $0.70 and $0.80/barrel the next day, with cancellation clauses within 96 hours now becoming standard. Fares for July loads on the TD3C route were immediately increased by eight points on WS 65, while the transport of LR2 goods from the Arabian Peninsula to the UK now includes an increase of $600,000 for an option to sail through the Cape of Good Hope."
VLCC shipowners are now demanding advance payments on fares, while several charters for July have been renegotiated even at sea, as margin calls exceed spot rates.
Analysts point out, the situation is even more critical in liquefied natural gas (LNG). All of Qatar's LNG—accounting for 18 percent of global supply—and the UAE's growing volumes pass through Hormuz. China relies on these cargoes for 26.9 million tonnes per year, i.e. for one in four of its cargoes. Any disruption to flows will prompt Pacific buyers to sweep the Atlantic basin, driving the Japan-Korea Marker (JKM) from its already high $12.8/MMBtu to the mid-$10. Middle East-Japan LNG transport charges with modern dual-fuel ships now reach $110,000/day.
Despite the fact that the infrastructure remains intact and Tehran declares that the pipelines are operating normally, the market is pricing in the worst. According to an analysis by Xclusiv Shipbrokers, a possible two-week closure of Hormuz would withdraw about 6 million tonnes from the market. barrels per day (crude and commodities), dropping OECD countries' stocks below the five-year average within six weeks and potentially driving Brent near $90–$95, with a parallel explosion in freight rates of all types.
The tension goes beyond the narrow geographical boundaries of the Gulf. Japan's Mitsui O.S.K. has issued safety warnings for its entire fleet, while the UKMTO is documenting increased activity of high-speed boats and drones that may again hit the Red Sea arteries.
Iran, of course, is unlikely to completely close Hormuz without undermining itself. The new terminal in Jask, east of the strait, is operating rudimentarily with under 300,000 barrels per day. 90% of the 1.7–1.8 million of barrels/day of Iranian exports, mainly to China, is still loaded from Kharg. A complete blockade would cause a sharp rise in prices, international isolation, possible U.S. intervention and exposure of Iranian assets.
Investors, in this climate, are offsetting both scenarios. There is a strong interest in Aframax ships 15 years old or older, as a "bet" on vessels that can bypass sanctions if Western fleets leave the region. However, the value of this strategy is limited by a hard fact: the only capable of surplus production capacity to fill an Iranian vacuum lies in Saudi Arabia, Kuwait, and the UAE—i.e., within the same range of missile attacks.
Until progress is made in the Oman negotiations, oil will hover in the $70–$90/barrel range, the JKM index at $13–$15/MMBtu, and fares will remain high, favouring modern multi-fuel vessels while offering an unexpected "second life" to aging vessels.
