VLCC freight rates have taken a "roller coaster ride," but the "anchor" that determines the direction of the industry has not loosened.

1. What Happened? — From “Ceasefire Expectations” to “Transit Reversals,” the Oil Shipping Market Went Through a Wild Rollercoaster

Recently, the narrative in the global oil shipping market has unfolded in three stages: from “ceasefire expectations heating up,” to “protocol signing and implementation,” and then to “transit reversals and freight rates collapsing.” In just seven weeks, market sentiment completed a full cycle from extreme optimism to a panic-driven pullback.

Phase 1 (early May to mid-June): Ceasefire expectations kept strengthening, and the freight-rate benchmark remained steady with a mild upward drift. In May, although the Strait of Hormuz was still under a de facto blockade, as both the U.S. and Iran released increasing signals of negotiations, the market started trading ahead of time on the logic of “resumption of navigation + replenishment.” On the Atlantic route, VLCC TCE stayed at $90k–$100k per day, while on the West Africa–China route (TD15) it fluctuated around $100k per day. The key feature of this period was that although freight rates retreated from the extreme highs at the start of the war, they were still far above historical averages—markets were shifting from “panic premium” toward “rational value reassessment.”

Phase 2 (June 15 to June 22): The agreement was signed, and freight rates surged to the top in an instant. On June 15, a U.S.–Iran ceasefire memorandum of understanding was reached; on June 17, the two sides formally signed the memorandum. The U.S. committed to immediately begin lifting the maritime blockade on Iran and to fully lift it within 30 days, while Iran committed that merchant vessel passage would begin immediately. On June 22, the U.S. Treasury Department’s OFAC issued General License X for Iran sanctions, temporarily unblocking related transactions such as the production, sales, transportation, and insurance of Iranian crude oil and products, valid until August 21. After the news landed, VLCC freight rates exploded: Middle East route quotes once jumped to WS 650–750, translating to as high as $7.0m–$8.2m per day—about three times the level before the conflict. As of June 22, TD3C (Middle East–China) TCE reached $512k per day, up 574% year-on-year; TD15 (West Africa–China) reached $189k per day, up 203% year-on-year; TD22 (U.S. Gulf–China) reached $155k per day, up 258% year-on-year. In the same period, strait transit volumes also rebounded—from fewer than 1 vessel per day on average before the agreement was reached to 7 vessels on June 22 (pre-war average about 19 vessels per day).

Phase 3 (June 23 to June 30): Transit reversals returned, and freight rates experienced a “cliff-like collapse.” However, the dawn of peace was fleeting. On June 23, the IMO launched a large-scale crew evacuation; on June 25, a container ship was attacked on the Oman side; on June 26, Iran attacked strait vessels again, raising doubts about the stability of the agreement framework. The U.S. and Iran accused each other of undermining the temporary ceasefire, and the situation quickly returned to a high-risk state. Freight rates then turned sharply downward—TD3C fell rapidly from its peak of $512k per day; in the week ending June 26, the Middle East–China route was quoted at $288k per day, down 27% week-on-week. Even more dramatically, on June 26 itself, the Baltic Exchange assessed the TD3C daily time charter rate at $328k, a plunge of $107k from the previous day—down by roughly one quarter. And actual transaction prices were even lower: trader Mercuria chartered a VLCC under the Onassis flag for just $202k per day. The capital markets responded in parallel: on June 26, China Merchants Energy Shipping hit the daily limit down, COSCO Shipping Energy Transportation fell 9.09%, and China Merchants Nanjing Tanker Co., Ltd. fell 8.57%.

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