Trading companies and oil importers have deferred chartering for several tankers in the Persian Gulf and released those previously hired, prompting owners to seek employment elsewhere to maintain cash flow, several Asia-based shipping brokers, owners and charterers told Platts, part of S&P Global Energy, March 5.
At least half a dozen Long Range (LR) tankers were released in the last 24 hours after being previously chartered for spot voyages in the Persian Gulf, and three more fixtures may fail anytime now, according to a UAE-based chartering executive with a commodities trading company.
Platts assessed the benchmark Persian Gulf-Japan LR1 route down w35 day over day at w350 on March 5.
A monthly average of more than 100 LR1s and LR2s each load for long-haul voyages in the Persian Gulf and West Coast India combined, or a total of around half a dozen LR1s and LR2s daily, according to estimates of several brokers based in East Asia.
The trade disruption amid war in the Persian Gulf has led owners to make lower offers for their ships in the spot market, according to the UAE-based chartering executive.
According to market sources, these ships are now either unable to enter the Persian Gulf due to the raging war or are already there but unlikely to leave anytime soon.
Some of these tankers have already loaded cargo at Persian Gulf ports but are now waiting for the first available opportunity to move out through the Strait of Hormuz, said a chartering source in North Asia, whose company is facing this situation.
A chartering executive in East Asia said that his company was scheduled to charter an LR tanker for March 23 naphtha loading in Kuwait, but has postponed it because “it will be of no consequence.”
Tankers for loading most of these oil products are chartered one to three weeks in advance. Ships hired in mid-February were positioning themselves in various Persian Gulf ports the previous weekend, when the conflict broke out, according to market participants.
AIS signals show that seven ships navigated the Strait of Hormuz on March 3 compared with nine on March 2, 26 on March 1, and 91 on Feb. 28. A daily average of 135 ships crossed the Strait in February, Platts reported earlier.
Ships revise voyage routes
Many clean tankers planning to ballast to the Persian Gulf to pick up their next cargo are altering their plans and instead heading toward North Asia or West Coast India, according to Asia-based market participants.
One such LR2 tanker, a Trafigura-relet, the Palamas, was heard to be placed on subjects at w235 by BP for March 9 loading on the Sikka-Australia route. Potentially, such tankers could have earned double the amount they are earning now had the Strait of Hormuz been open, shipping sources said.
Two LR1s are returning to West Africa and an MR, which was sailing from Durban to Persian Gulf, turned back in Mozambique, and is now heading to Cape Town, they said.
During the Iran-Israel conflict in June 2025, ships commanded risk premiums and freight rates surged, as shipping lanes remained open and war risk insurance was available, several shipping sources said.
This time, however, restricted traffic through the Strait of Hormuz has prevented owners from capitalizing on higher freight, curbing their earnings prospects, sources said.
Insurance can be game-changer
Insurance companies may offer new war risk coverage for ships transiting the Strait of Hormuz and Gulf of Oman at higher premiums in the coming days, according to two Asia-based tanker owners and a shipping broker.
Once the insurance is available for both cargoes and ships, traffic in the Persian Gulf is expected to recover, the broker said.
However, normalization remains unlikely as many trading and shipping companies are listed on stock exchanges and compliance teams continue to restrict Persian Gulf transit. Even with insurance available, crew safety concerns persist, an executive with a technical ship management company said.
Several insurance companies canceled existing war risk cover after the Middle East conflict erupted over the weekend, citing the need to reassess risk, according to the executive.
Source: Platts
