SINGAPORE: Freight rates for oil and liquefied natural gas (LNG) shipments from the Middle East surged on Monday as escalating hostilities between the United States, Israel and Iran disrupted traffic through the Strait of Hormuz.
Shipping through the strait — a key route between Iran and Oman that carries around one-fifth of global oil trade and large volumes of gas — slowed sharply after vessels in the area were hit during Iran’s retaliation to US and Israeli strikes.
According to Spark Commodities, daily LNG freight rates in the Atlantic basin climbed 43% to $61,500 per day, up $18,750 from the previous session. Pacific LNG rates rose 45% to $41,000 per day, an increase of $12,750.
Oil tanker markets recorded sharper gains. LSEG data showed that the benchmark freight rate for very large crude carriers (VLCCs) on the Middle East–China route, known as TD3, rose to Worldscale 419, equivalent to $423,736 per day. The rate has doubled since Friday, extending gains from a six-year high last week.
The spike followed US and Israeli strikes on Iran and Tehran’s subsequent retaliation targeting Gulf states and vessels transiting the region. Iranian media reported that a senior Revolutionary Guards official said the Strait of Hormuz had been closed and warned that ships attempting to pass would be targeted.
Shipbrokers said assessing freight levels had become difficult as several shipowners suspended operations in the Gulf due to security concerns.
The sharp rise in tanker and LNG shipping costs adds pressure to global energy markets already facing supply uncertainty from the widening conflict in the oil-producing region.
