Heightened Middle East tensions and OPEC+ support temporarily boosted tanker earnings
June was characterized by heightened volatility. The first half of the month saw muted activity and seasonal softness, but the tanker market staged a sharp rebound in the second half, driven by escalating tensions between Iran and Israel.
VLCC rates more than doubled within a single week, while the Suezmax and Aframax segments also posted significant gains. However, as signs of de-escalation emerged in the final days of June, earnings gradually reverted to more typical levels.
Geopolitical tensions are extending shipping routes
The Iran-Israel conflict created significant uncertainty, prompting cautious shipowners to reroute vessels away from the Persian Gulf. This shift not only tightened available fleet supply but also lengthened voyage distances and boosted tonne-mile demand. Despite a provisional ceasefire brokered by the US at the end of June, operational inefficiencies, route changes, and increased risk premiums continued to sustain historically elevated freight rates across the market.
Solid market fundamentals are bolstering industry confidence
Beyond geopolitical influences, several structural factors are also enhancing the tanker market outlook. OPEC+ is gradually reversing its production cuts, with an additional 2.2 million barrels per day scheduled to return between April and November. Analysts anticipate this will generate demand equivalent to 70 more Suezmax vessels, further supporting seaborne trade. At the same time, the global tanker orderbook remains at a historic low and an aging fleet profile is heightening expectations of increased scrapping activity.
Stricter sanctions are increasing pressure on non-compliant tonnage
Western sanctions targeting the shadow fleet have further restricted available tonnage, encouraging a shift back toward compliant shipping. The European Union is considering additional limits on Russian oil exports, measures that could reshape global trade routes and sustain elevated freight rates due to increased tonne-mile demand.