VLCC shipping costs explode 43-fold amid Hormuz tensions

Shipping costs for very large crude carriers (VLCCs) have skyrocketed to an unprecedented $1.3 million per day, marking a 43-fold increase from early January when rates stood at around $30,000 per day, according to data from Poten & Partners. This surge adds nearly $33 to the cost of each barrel of crude, accounting for about 27% of its delivered cost, based on Brent crude priced near $120 per barrel. In January, freight costs contributed only about $1.73 per barrel, or roughly 3% of the delivered cost.

The dramatic spike underscores the impact of Middle East shipping disruptions, particularly around the Strait of Hormuz. Security risks and restrictions in the region have led to longer shipping routes, increased ship-to-ship transfers, and higher war-risk premiums. These factors have also tied up a significant portion of the global VLCC fleet in the Gulf of Oman, further tightening vessel availability.

According to Clarksons Research, average global VLCC spot earnings have approached $642,000 per day, with some Middle East-to-Asia routes exceeding $1 million per day. Saudi export flows and shuttle operations through Hormuz have exacerbated the scarcity of available vessels. For refiners and traders, this has resulted in a sharp rise in landed crude costs, even before accounting for insurance, financing, and port charges.

The $1.3 million figure represents a market assessment rather than a universal rate, as VLCC pricing varies by route, vessel availability, cargo size, insurance, and war-risk exposure. Despite these variations, multiple freight assessments confirm the historic spike driven by Hormuz-related disruptions and limited tanker capacity.