A freight indicator for the Middle East Gulf-to-East Asia (MEG-China) VLCC route showed the Worldscale (WS) index at 410.44 as of March 2. That put daily time-charter equivalent earnings at $423,736.
Just before the outbreak of war between the United States and Israel and Iran, the index stood at 224.72 on Feb. 27, with TCE at $218,154. In January, the WS index was 96.12 and TCE was $78,793, meaning rates have risen more than fivefold in about a month.
Worldscale is a standard benchmark used to settle international tanker freight for crude and refined products. A rate of 100 is typically treated as the baseline; readings below 100 signal weak conditions and above 100 indicate strength. A move above 400 is widely seen as an extreme level reflecting war risk.
Iran said through the semiofficial ISNA news agency that “the Strait of Hormuz has been closed,” warning that “any vessel that attempts to pass will be burned by the Revolutionary Guards and the regular navy.” It added that it would ensure “not a single drop of oil” leaves.
Market participants fear tanker freight could jump more than tenfold from prewar levels if the strait is effectively shut, as marine insurance costs — a major component of shipping expenses — continue to rise.
The Strait of Hormuz is a strategic chokepoint through which about 20% of global seaborne crude volumes pass. A blockade would likely create supply bottlenecks and drive freight sharply higher. Some analysts say prolonged tensions could push the WS index toward 800 and daily charter rates close to $800,000.
The surge in tanker rates is also adding upward pressure on energy costs in South Korea, which relies heavily on Middle Eastern crude. Higher Middle East-to-East Asia transport costs are likely to raise refiners’ import costs, and could become a key factor — alongside rising global oil prices — in lifting domestic prices for petroleum and petrochemical products and consumer inflation.
A shipping industry official said the strait has not been “physically completely blocked,” but the risk of attack means carriers view it as “effectively under blockade.” The official said WS above 400 is “an extreme level beyond market norms,” and warned that if war uncertainty persists, the shock could spread beyond shipowners to global logistics overall.
* This article has been translated by AI.
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