Oil tanker rates from Middle East to Asia increases fivefold

MOSCOW: Oil tanker rates from the Persian Gulf to Asia on large tankers have increased fivefold compared to levels before the Middle East conflict, the International Energy Agency (IEA) said, reported Sputnik/RIA Novosti.

"In September, tanker rates surged to historic highs. By mid-October, the cost of shipping crude from the Middle East Gulf to Asia on a large tanker had climbed to over US$37 per barrel, more than five times its level before the war began," the IEA said in a statement on Wednesday.

Since the conflict began in March, vessel congestion in the Strait of Hormuz, rerouting of trade flows, and the increasing use of ship-to-ship transfers have led to longer delivery times and reduced fleet efficiency, which in turn has led to higher freight rates, the statement added.

"As vessels spend longer on disrupted routes, demand has spilled over into smaller tankers. Instead of using VLCCs, charterers have been splitting crude cargoes across smaller Suezmax and Aframax vessels, driving up demand for both," the organisation noted.

According to the statement, in the third quarter of 2026, demand for tankers of these two classes, measured on a tonne-mile basis, was about 20 per cent higher than a year earlier, the report read.

The IEA clarified that by mid-October, the cost of shipping crude from West Africa to Europe on a Suezmax exceeded US$22 per barrel, more than four times the pre-conflict level. The cost of shipping crude on an Aframax vessel in the North Sea also tripled, exceeding US$6 per barrel.

"The impact has extended into the product tanker market. Exceptionally high earnings in crude shipping have encouraged some owners to use Long Range 2 (LR2) vessels – the largest tankers commonly used for long-haul shipments of oil products – to transport crude instead," the statement said.

As a result, oil product cargoes have been redistributed among smaller vessels, leading to a reduction in supply in the product tanker market. In mid-October, freight rates for Long Range 1 (LR1) tankers travelling from the Persian Gulf to Japan were nearly US$27 per barrel, five times higher than before the conflict, the organisation noted.