Tanker Rates Hit Record Highs, Squeeze Fuel Prices

Geopolitical Pressure Drives Historic Tanker Rates

According to a report via Hellenic Shipping News, citing analysis from ING, tanker freight rates have climbed to record levels this year as the Middle East conflict continues to disrupt shipping. Tankers have faced sanctions exposure and repeated incidents in critical chokepoints such as the Strait of Hormuz, Bab al-Mandeb and the Gulf of Aden, while demand for tanker capacity has risen as traders pursue alternative routes and supply sources, including greater volumes from the US.

A protected corridor through Omani waters has allowed additional crude exports and vessel movement, though it has added further strain to an already tight market. Shuttle services now operate around the Strait of Hormuz, alongside less visible activity and ship-to-ship transfers conducted outside the chokepoint itself.

Capacity Shortage Compounds the Squeeze

The disruption arrived as the market was already short on capacity. New crude carrier deliveries slowed considerably after the order book hit a record low in 2022-23, while a growing number of older, smaller vessels moved into Russia’s shadow fleet, shrinking the pool of tankers available for compliant trade.

The combination of scarce capacity, war-zone operating risk and steep insurance premiums has pushed rates to levels the report describes as beyond anything seen previously — surpassing even the surge that followed the 2022 sanctions on Russia. Average global crude vessel earnings reportedly exceeded $500,000 per day in early October, ten times the 2025 average, with Suezmax and VLCC rates running even higher. Freight for crude shipments from Ras Tanura to Rotterdam, around $2 per barrel through 2025, reportedly climbed past $35 in September. Combined with elevated refinery margins — Europe’s diesel crack spread is said to be roughly 2.5 times the 2025 average — this could add over $0.50 to the pump price of a litre of diesel. Product tanker earnings have also roughly tripled versus the 2025 average, though less sharply, reflecting the Middle East’s particular importance to crude trades and VLCC deployment patterns.

Orders Rebound, but Relief Is Years Away

The report notes that tanker markets are cyclical, and the current boom follows a historic low: the pandemic-era slump of 2020-21 left the crude carrier order book at just 4% of global capacity, the lowest since the 1990s. Order intake began to rebound with the recovery in 2022-23, and the order book has doubled this year from 14% to 28%. The crude fleet’s average age has also reached a multi-decade high of over 13 years, pointing to further scrapping ahead. However, many of these vessels will only be delivered in 2028-29 — likely after the current rate surge subsides. The report suggests that, depending on how the Middle East conflict evolves, tanker markets could still see a strong 2027.