Vortexa reports that transit levels in the Strait of Hormuz are being closely monitored since June 13, and they remain within their normal ranges.
Mary Melton is a senior freight analyst with Vortexa. She said that the transits for the week ended June 22 was robust. They were 4% higher than 2024’s average, and slightly above the average weekly for the preceding month.
June transits
The overall strength of transits in the third week is notable.
The first half of the month (June 1- 15) saw a very strong increase in crude/condensate oil exports, primarily due to the use of term contracts.
Melton explained that the decline in transits of crude oil tankers was due to the slowdown in the exports during the second part of the month. This is an often observed pattern in the loadings coming from the Middle East Gulf.
Since the Israel-Iran war began on the 13th of June, the tanker industry’s main concern has been the Strait of Hormuz.
Hormuz imports 24% of the total oil imported by sea and 33% crude oil.
It would be disastrous to close this crucial strait. This is unlikely because of its nature, which escalates, and the impact it has on Iran’s exports of oil to China.
According to the tracking agency, the average number of daily transits in the Strait was at its highest level for the season during the 22 first days of June.
Melton stated that “although there is volatility in transit numbers from day to day since the attacks, fluctuations in transit figures are common even during normal times. We would advise against drawing any conclusions based on daily changes in transit over a brief period of time.”
Vortexa data indicates that operators do not avoid transiting the Strait of Hormuz. However, it observed vessels waiting in the Strait of Hormuz and only appearing to transit when required to meet a laycan.
Spot freight rates rise
Despite the small likelihood that the Gulf of the Middle East will be closed, tanker markets still need to take into account the inherent risks in travels via Hormuz.
According to Vortexa, spot freight rates in the Middle East have risen by over 100 percent since June 13. VLCC rates had climbed to their highest levels for 16 months on June 23. They were at year-to date lows of June 12 before that.
Rates for VLCCs (very large crude carriers) have risen worldwide. The US Gulf VLCC rate has increased by 40% over the past year.
In spite of static freight rates following the US strikes, Tradewinds reports that War Risk Premiums increased Monday, signaling a continued increase in charterer costs due to continuing tensions.
The agency stated that, although unlikely, it is possible for the market to withstand the loss of transit crude from Hormuz by about 13 months, due to the length of the supply chain.
Melton says:
The relatively low crude oil prices so far can be explained by this.
The rising costs of Middle East shipping could cause Asian buyers to shift their purchases into the Atlantic Basin. This would increase tonne miles and VLCC prices due to increased demand, and possible fleet constraints from concerns about risk.
Long range tankers
Like VLCCs (long-range tankers), LR rates are up dramatically from their sluggish level in the weeks before the conflict.
Vortexa reported that LR1 rates eastbound are up 66%, LR2 rates eastbound are up 85% and LR2 rates westbound, by 65%.
Analysts at Vortexa have observed an increase in the transatlantic export of diesel from the US Gulf into Europe and an increased rate for Medium Range Tankers (MR).
The fear of a lack of supply in Northwest Europe, and the difficulty of implementing east-west middle distillate flow flows is probably behind this trend.
The Middle Distillates for Europe from the Wider Arabian Sea could be increasingly sourced by India’s West Coast or Saudi Arabian exports through its Red Sea Ports of Yanbu and Jizan.
Melton stated that “the MEG’s exports of naphtha to Asia will be harder to replace. However, LR voyages between the Med and Russia Baltics heading East are likely to increase.”
What will be the future of freight rates?
Melton stated, “We have heard of a clause that vessel operators consider, which allows them to cancel voyages without arbitration at any given time, due to concerns about safety.”
The risk of increased danger can be maintained by vessel operators while minimising actual exposure.
The announcement by US President Donald Trump of a ceasefire that was apparently agreed to by Israel and Iran could stop the increase in freight rates, and reduce concerns over the possibility of the closure of the Hormuz Strait.
David Morrison is a senior analyst with Trade Nation. He said that despite Iran’s nukes, both Israel and Iran chose not to attack each other’s infrastructure.
It became clear that Iran was not going to close the Strait of Hormuz.
Vortexa says that while oil prices are expected to decline faster, freight rates and war-risk premiums will likely decrease more slowly.
Tanker operators are still able to charge higher rates for the transport of cargo due to their regional instability.
The post This post Analysis Strait of Hormuz Transit steady but freight rates may continue to rise could be updated as new developments unfold.
