MW Prices to charter large oil tankers soar as Strait of Hormuz traffic grinds to a halt
By Claudia Assis
Charter rates nearly doubled in recent days and are up fivefold since the start of the year
A time-lapse image showing Strait of Hormuz shipping traffic from Friday to Wednesday, showing a collapse after the Saturday attacks on Iran. Red dots represent oil tankers, and green dots represent cargo ships.
The widening conflict in the Middle East is hitting the global shipping industry hard, with prices to charter the massive oil tankers that haul the world's crude nearly doubling in recent days and going up fivefold since the start of the year.
The war launched by the U.S. and Israel against Iran has disrupted traffic through the Strait of Hormuz, a key crossroads of the world's commerce, trapping thousands of oil tankers and container ships. Iran declared it has closed the narrow maritime passageway and said it would attack ships attempting to navigate through it.
The U.S. government estimates that around 20 million barrels a day of crude oil and petroleum products pass through the strait in times of peace.
According to data from the Baltic Exchange in London, on Wednesday global spot rates to charter supertankers hit $315,000 a day - 77% higher than on Friday and 400% higher than late December, when the daily rate hovered around $63,000 a day.
The cost of chartering one oil tanker, in dollars per day, has spiked in recent days.
A person in the shipping industry, whose name MarketWatch is not disclosing because they were not authorized to speak with the media, said that shipping rates are "eclipsing previous all-time highs" and volatility in the market is at its worst.
The conflict in Iran entered its fifth day on Wednesday, with the U.S. saying it is accelerating its attacks, while Iran is returning fire and denying it has reached out for peace talks. The spreading conflict and damage to some oil and gas facilities in the region earlier this week have resulted in steep equity and debt selloffs and jolts to crude markets. New York-traded oil futures (CL00) are up 11% so far this week, on par with the hikes for London-traded Brent crude (BRN00) - though oil prices stabilized on Wednesday.
Charter rates were already elevated by late last year, and had moderated a bit in early 2026. According to the U.S. government, rates rose in the fall because of increased demand for crude-oil shipments, particularly from buyers in East Asia, curbing the number of vessels available for bookings.
In shipping-industry parlance, the massive tankers are called "very large crude carriers," or VLCCs; each VLCC can carry about 2 million barrels of crude oil on usually long-haul routes. Suezmax vessels - the largest tankers that can transit the Suez Canal - carry around 1 million barrels and are designed for medium-length routes.
The container-shipping industry had dramatically reduced its normal operations due to the war and Iranian threats to sink its vessels.
Major container-shipping companies such as privately held MSC, Maersk (DK:MAERSK.B) and Hapag-Lloyd $(HPGLY)$ (XE:HLAG) have halted voyages and bookings to most of the Persian Gulf and adjacent areas, with ships in transit diverted to the nearest safe ports.
The U.S.-Israel military campaign against Iran has also caused investors to worry about industries from airlines to fertilizers and beyond.
President Donald Trump on Tuesday said the U.S. Navy would escort ships through the Straight of Hormuz if necessary, and also ordered the U.S. government to provide political-risk insurance and guarantees "for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf."
Analysts at J.P. Morgan calculated in a note late Tuesday that some Middle Eastern crude-producing countries are mere days from running out of storage space for their oil, which would lead to a halt in their production.
The analysts said they were "conservative" in assessing storage limits, which don't include some potential storage sites and VLCCs that could be used as storage vessels, although those are also thin on the ground per reports, they said.
-Claudia Assis
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March 04, 2026 16:26 ET (21:26 GMT)
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