BAKU, Azerbaijan, March 27. Freight rates for shipping crude oil from the Middle East to Asia surged to their highest level in decades in March, highlighting mounting pressure in global energy logistics, Trend reports citing the data from Argus Freight.
The U.S. Energy Information Administration (EIA) notes that the price increase followed Iran’s closure of the Strait of Hormuz on March 2.
“The Strait of Hormuz is an important chokepoint, connecting the Persian Gulf to the Gulf of Oman and Arabian Sea. The physical risk of attacks on vessels attempting to traverse the Strait of Hormuz, as well as the high cost of war risk insurance for vessels to do so, drove crude oil tanker rates from the Middle East Gulf to all destinations to record highs,” said the EIA.
Weekly rates for Very Large Crude Carriers (VLCCs) on the key Middle East–Asia route spiked to around $14 per barrel, a sharp jump from typical levels of $1–$3 per barrel seen over much of the past decade, the data showed.
The latest spike significantly exceeds previous peaks, including those recorded during the 2008 financial crisis, when rates briefly climbed to about $6–$7 per barrel, and in 2020, when disruptions during the COVID-19 pandemic pushed rates above $6 per barrel.
For most of the period between 2010 and 2023, tanker rates remained relatively subdued, fluctuating largely between $1 and $3 per barrel, reflecting stable supply-demand conditions and ample shipping capacity. However, since late 2024, rates have shown increased volatility, culminating in the sharp March surge.
EIA notes that the high risk and effective closure of the Strait has led to a backup of vessels confined in the Persian Gulf that had already loaded crude oil from various Gulf countries. The confined vessels reduce the availability of global tanker capacity, which increases tanker rates.
“Crude oil tanker rates from the Americas, especially the U.S. Gulf Coast, also rose to record highs because of high demand for crude oil and fewer vessels available for shipment.
Clean tanker (used for petroleum products) and natural gas carrier rates have also increased. On March 17, the U.S. Department of Homeland Security issued a temporary waiver for compliance with the Jones Act, which may contribute to additional shifts in global shipping and tanker availability,” said the EIA.