The supertanker charter market has become red-hot this year as the specter of a U.S. military campaign in Iran has added to a number of other bullish factors to push daily rates to the highest in nearly six years.
The daily rate for hiring a very large crude carrier (VLCC), capable of shipping 2 million barrels, on the key Middle East Gulf to China route (MEG-China) this week topped $200,000. That’s the highest daily rate since early April 2020, when Saudi Arabia and Russia were flooding the market with crude in the brief price war amid plunging demand at the onset of the Covid pandemic.
Rates could surge to new highs in the coming weeks if Thursday’s indirect talks between the United States and Iran in Geneva fail, as many analysts expect.
In that case, war premiums would rise, and Middle Eastern oil producers would race to ship more oil out of the Gulf to avoid being caught in a potential disruption of supply.
Rates Soar to Six-Year High
The MEG-China index of the Baltic Exchange jumped by 46% in the week to February 25, to $206,141 per day rate for a supertanker, according to data compiled by Lloyd’s List.
The daily rate for a supertanker on the MEG-Singapore route soared by 66% in a week to $213,599 per day.
These rates to ship crude on supertankers out of the Middle East have also pushed the global VLCC average, according to the data.
A number of factors have contributed to the surge, most notably the increased demand from India for Middle Eastern crude as New Delhi seeks to replace a large part of the Russian barrels it had bought over the past three years.
Moreover, near-term demand for Saudi Arabia’s oil in China is soaring after the Kingdom early this month slashed its official selling prices (OSPs) for Asia to the lowest level versus regional benchmarks in more than five years.
As a result, oil loadings from Saudi Arabia to China in March are estimated at about 56-57 million barrels, up from 48 million barrels loaded in February, anonymous traders with knowledge of the orders told Bloomberg earlier this month.
In addition, tanker owners and charterers have rushed in recent days to ship crude out of the Middle Eastern region amid escalating tensions between the United States and Iran.
Fundamentally Changed Supertanker Spot Market
Following a brief respite in January, the tanker rates have rebounded this month to the highest since 2020 as the market became aware of a major vessel buying spree from South Korea’s Sinokor shipping group, which is now estimated to control about a fourth of all available non-sanctioned tankers.
“The VLCC market has continued on an upward trajectory in the week gone by and Sinokor Maritime has begun to capitalize on their huge investment in the segment as daily earnings have moved beyond USD 200k/day,” brokerage Fearnleys said in its weekly report to February 25.
“The MEG dominates the demand, and the front end of the position list is shrinking by the hour, leaving charterers with few other alternatives to choose from but the South Korean giant,” added the brokerage, concluding that the VLCC market should “expect more of the same short term.”
The strong bull run in the supertanker market could also push up demand for smaller vessels, tightening the market and lifting daily rates for Suezmaxes, too, as some traders could opt for lower-cost freight if arbitrage and pricing economics make sense.
Global sanctions enforcement and tensions in the Middle East are supporting supertanker rates right now, Michael Ryan, Freight Commodity Owner at market intelligence firm Sparta Commodities, said this week.
“On top of that, Sinokor’s rapid consolidation of 40+ VLCCs has concentrated ownership and reduced the odds of price capitulation,” the expert noted.
“Net-net, this argues for higher lows and a higher trading range in global VLCC rates,” Ryan added.
The unprecedented level of concentration in the supertanker market has also pushed rates higher as Sinokor’s acquisition spree has fundamentally changed the playing field, according to analysts and brokerages.
“Sinokor is projected to independently control at least 24% of the VLCC spot fleet in 2026, an unprecedented level of concentration in the modern market,” Signal Group, a shipping analytics company, said in a report last week.
“This development marks a fundamental change in the competitive dynamics of the VLCC spot segment, elevating Sinokor to a scale never previously observed for a single commercial operator,” analysts at Signal Group wrote.
Just two years ago, in 2024, ownership was more balanced, with Sinokor, Frontline, and COSCO each managing about 12–13% of the spot-trading fleet of supertankers, according to Signal Group.
The current massive expansion of the trading fleet gives Sinokor a prominent role in the near-to-medium term spot VLCC market. It also pushes freight rates higher, alongside the geopolitical developments that push producers to rush to ship crude out of the Middle East before a potential U.S. military campaign in Iran.
