Mar 3, 2026
Global oil and gas shipping costs rise dramatically as Iran threatens to shut the Strait of Hormuz.
Global shipping rates for oil and gas surged, with costs for supertankers in the Middle East reaching unprecedented levels, as the U.S.-Iran tensions escalated after Iran targeted vessels in the Strait of Hormuz, according to shipping data and industry insiders on Tuesday.
Maritime traffic in the Strait of Hormuz, which facilitates about 20% of the world's oil and significant amounts of liquefied natural gas, has nearly come to a standstill after Iranian retaliation to U.S. and Israeli airstrikes resulted in attacks on ships in the area.
This disruption and concerns about a prolonged closure have led to spikes in oil and European natural gas prices, with Brent crude futures rising nearly 10% this week as multiple oil and gas operations faced shutdowns in the Middle East. The benchmark freight rate for Very Large Crude Carriers (VLCCs) transporting 2 million barrels of oil from the Middle East to China, known as TD3, reached a record high of W419 on the Worldscale measure on Monday, translating to $423,736 per day, according to LSEG data.
The rate doubled from Friday, building on gains from a six-year peak last week, following U.S. and Israeli strikes that resulted in the death of Iran's Supreme Leader Ayatollah Khamenei on Saturday. In response, Iran has targeted Gulf countries, prompting precautionary closures at oil and gas facilities across the region. An Iranian Revolutionary Guards official indicated on Monday that the Strait of Hormuz is closed and that Iran would attack any vessel attempting to pass, according to Iranian media reports. However, the U.S. military's Central Command stated that the Strait is not closed, as reported by Fox News.
LNG shipping rates also soared, with daily freight rates for LNG tankers increasing by more than 40% on Monday after Qatar halted production. Atlantic rates climbed to $61,500 per day, a 43% rise, or $18,750, from Friday, as per Spark Commodities. Meanwhile, Pacific rates increased to $41,000 per day, a 45% rise, or $12,750, from Friday. Fraser Carson, a principal analyst for global LNG at Wood Mackenzie, noted that spot daily LNG shipping rates could exceed $100,000 this week due to tight supplies. He remarked that vessel availability for the remainder of March is expected to be weak as operators work through a backlog caused by weather disruptions in February. "There will be fierce competition for any available vessels," he added.
Until safe transit through the Strait of Hormuz is guaranteed, shipping operations will likely remain stalled, Carson stated. An anonymous oil shipbroker mentioned the challenge of assessing shipping rates in the Gulf, as several shipowners have indefinitely suspended their operations. South Korean shipping firm Hyundai Glovis announced on Tuesday that it is preparing contingency plans, such as securing alternative routes and ports, in response to the conflict in the Middle East. Additionally, South Korea's maritime ministry has advised shippers with vessels in the region to refrain from operations there, as an official told Reuters on Tuesday. The ministry is convening a meeting to discuss further safety measures following Iran's threats against ships in the Strait of Hormuz.
Maritime traffic in the Strait of Hormuz, which facilitates about 20% of the world's oil and significant amounts of liquefied natural gas, has nearly come to a standstill after Iranian retaliation to U.S. and Israeli airstrikes resulted in attacks on ships in the area.
This disruption and concerns about a prolonged closure have led to spikes in oil and European natural gas prices, with Brent crude futures rising nearly 10% this week as multiple oil and gas operations faced shutdowns in the Middle East. The benchmark freight rate for Very Large Crude Carriers (VLCCs) transporting 2 million barrels of oil from the Middle East to China, known as TD3, reached a record high of W419 on the Worldscale measure on Monday, translating to $423,736 per day, according to LSEG data.
The rate doubled from Friday, building on gains from a six-year peak last week, following U.S. and Israeli strikes that resulted in the death of Iran's Supreme Leader Ayatollah Khamenei on Saturday. In response, Iran has targeted Gulf countries, prompting precautionary closures at oil and gas facilities across the region. An Iranian Revolutionary Guards official indicated on Monday that the Strait of Hormuz is closed and that Iran would attack any vessel attempting to pass, according to Iranian media reports. However, the U.S. military's Central Command stated that the Strait is not closed, as reported by Fox News.
LNG shipping rates also soared, with daily freight rates for LNG tankers increasing by more than 40% on Monday after Qatar halted production. Atlantic rates climbed to $61,500 per day, a 43% rise, or $18,750, from Friday, as per Spark Commodities. Meanwhile, Pacific rates increased to $41,000 per day, a 45% rise, or $12,750, from Friday. Fraser Carson, a principal analyst for global LNG at Wood Mackenzie, noted that spot daily LNG shipping rates could exceed $100,000 this week due to tight supplies. He remarked that vessel availability for the remainder of March is expected to be weak as operators work through a backlog caused by weather disruptions in February. "There will be fierce competition for any available vessels," he added.
Until safe transit through the Strait of Hormuz is guaranteed, shipping operations will likely remain stalled, Carson stated. An anonymous oil shipbroker mentioned the challenge of assessing shipping rates in the Gulf, as several shipowners have indefinitely suspended their operations. South Korean shipping firm Hyundai Glovis announced on Tuesday that it is preparing contingency plans, such as securing alternative routes and ports, in response to the conflict in the Middle East. Additionally, South Korea's maritime ministry has advised shippers with vessels in the region to refrain from operations there, as an official told Reuters on Tuesday. The ministry is convening a meeting to discuss further safety measures following Iran's threats against ships in the Strait of Hormuz.