Middle East tensions drive tanker rates higher
This week, EMF’s key maritime segments delivered strong results, supported by escalating Middle East tensions.
The ongoing conflict between Iran and Israel is having a significant impact across the industry, with tanker and gas markets—where EMF holds direct exposure—being particularly affected. While a near-term resolution appears unlikely, it is worth noting that the current market effects may ultimately be temporary.
Tanker markets benefit from heightened tensions in the Persian Gulf
Tanker segment revenues have seen strong growth, led by the VLCC class, which has more than doubled its rates week over week according to Fearnleys. Suezmax and Aframax rates have also posted notable increases. This momentum is primarily driven by rising geopolitical risk in the region, prompting shipowners to seek alternative routes—extending voyage distances and further tightening vessel availability.
The market is also increasingly concerned about the possibility of a blockage in the Strait of Hormuz. However, both EMF and the majority of industry experts consider such an event highly unlikely, as it would severely disrupt the global energy supply chain and impact Iran as much as its adversaries.
For further analysis of the Iran-Israel conflict, see Article 2.
The liquefied gas market is also experiencing an increase in rates
The liquefied gas market is also reacting to regional instability. A significant portion of global gas exports originates from the Middle East, and shifting trade flows are directly impacting freight rates. The VLGC segment, in particular, is benefiting from stronger arbitrage opportunities on US–Asia routes, resulting in more tonnage being redirected westbound. The benchmark Houston–Chiba route is now trading at a spot rate of USD 55,000 per day, up nearly 10% week over week.
The conflict is also indirectly prompting the PCTC segment to favor longer trading routes
The PCTC (car carrier) segment is also feeling the indirect effects of reduced navigational efficiency in the Suez Canal due to regional unrest. In the short term, this has prompted more vessels to reroute around Africa via the Cape of Good Hope, resulting in longer voyage times, decreased vessel availability, and a tighter market overall.
Source: Fearnleys, Clarksons