VLCC freight from the Middle East Gulf to Asia climbed above $37 per barrel by mid-October, more than five times its pre-conflict level, according to the International Energy Agency.
Charter rates on the route rose above $1.3m per day. Higher delivered crude costs pushed margins for Asian refiners processing Middle Eastern oil into negative territory in September.
The freight surge extended across the tanker market. West Africa-to-Europe Suezmax rates exceeded $22 per barrel by mid-October, more than four times their earlier level, while North Sea Aframax rates tripled to more than $6 per barrel. LR1 freight from the Middle East Gulf to Japan approached $27 per barrel, five times its previous level.
Long-haul alternatives were also costly. US Gulf Coast-to-Singapore crude freight reached about $33 per barrel, while shipments from the US Gulf Coast to Europe cost $24 per barrel, more than four times their earlier level.
Suezmax and Aframax demand measured in tonne-miles was around 20% higher year on year in the third quarter of 2026.
Congestion around the Strait of Hormuz, longer voyages caused by rerouting, ship-to-ship transfers and reduced fleet efficiency tightened vessel availability.
Pressure increased after disruption to Saudi Arabia’s East-West crude pipeline. Its temporary shutdown coincided with stronger Chinese buying, sending more Saudi crude through Hormuz.
VLCCs positioned at Sidi Kerir in Egypt were also left without expected cargoes, further tightening available tonnage.
Taiwan’s CPC Corporation bought replacement spot crude after disruption to the pipeline affected contracted September and October supplies from Saudi Aramco, while freight and insurance costs rose sharply.
Saudi Arabian Oil Co, known as Saudi Aramco, is a Saudi joint stock company whose principal activities include the exploration, production, processing, refining, distribution and marketing of hydrocarbons.
CPC Corporation, Taiwan is a state-owned petroleum company wholly owned by Taiwan’s Ministry of Economic Affairs, with operations spanning exploration, refining, petrochemicals, storage and fuel distribution.
