VLCC Tanker Charter Rates Top $400,000 a Day After Iran War, Data Show

A very large crude carrier built by Hanwha Ocean. (Hanwha Ocean photo)

U.S. and Israeli strikes on Iran have pushed daily charter rates for very large crude carriers above $400,000, as fears grow that Iran could block shipping through the Strait of Hormuz. Rates that had been in the low $200,000s surged to nearly double in a short period as Iran escalated its threats. Some analysts say rates could climb toward $800,000 a day if a blockade takes hold.

According to a Middle East-to-East Asia (MEG-China) VLCC route indicator obtained by Ajunews, the Worldscale (WS) tanker index stood at 410.44 as of March 2. That implies a daily time-charter equivalent, or TCE, of $423,736.

That is more than double the WS 224.72 and TCE $218,154 recorded on Feb. 27, just before the outbreak of war between the U.S.-Israel side and Iran, the data showed. In January, the WS index was 96.12 and the 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, with 100 typically treated as the baseline. A reading above 400 is widely seen as an extreme level reflecting war risk rather than ordinary market strength.

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 Hormuz route is effectively shut, as marine insurance — a major component of shipping costs — continues to rise sharply.

About 20% of the world’s seaborne crude oil passes through the Strait of Hormuz, making it a strategic chokepoint. Some in the market say that if tensions persist, the WS index could approach 800 and daily charter rates could near $800,000.

The surge in tanker costs is also adding upward pressure on energy prices 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, together with rising global oil prices, could lift 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 shipping companies “effectively view it as a blockade.” The official added that WS 400 is “an extreme level beyond market common sense,” and that if war-related uncertainty continues, the shock could spread beyond shipowners to global logistics overall.

* This article has been translated by AI.

Lee nakyeong nakk@ajunews.com