VLCC freight rates have been on a rollercoaster ride, but the "anchor" that determines the direction of the industry has not loosened.

1. What Happened?—From “Ceasefire Expectations” to “Navigation Whiplash,” the Oil-Tanker Market Rode a Wild Rollercoaster

Recently, the narrative driving the global oil-tanker market has unfolded through three stages: “ceasefire expectations heating up,” “protocol signing and implementation,” and then “navigation whiplash and freight-rate avalanching.” 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 rising, and the freight-rate center of gravity moved up steadily. During May, although the Strait of Hormuz remained in a de facto blockade, as the U.S. and Iran released increasingly strong dialogue signals, the market began trading ahead of the “resumption of navigation + replenishment of inventories” logic. On the Atlantic route, VLCC TCE held steady at $90k–$100k per day, while on the West Africa–China route (TD15) it fluctuated around $100k per day. The core feature of this period was: while freight rates had pulled back from the extreme highs at the start of the war, they were still far above historical averages. The market was shifting from “a panic premium” toward “a 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, the U.S.-Iran ceasefire memorandum of understanding was reached; on June 17, both sides formally signed the memorandum—in which the U.S. pledged to immediately begin lifting the maritime blockade against Iran and fully lift it within 30 days, and Iran pledged that passage for merchant vessels would begin immediately. On June 22, the U.S. Treasury’s OFAC issued General License X for Iran sanctions, temporarily unblocking related transactions involving the production, sale, transportation, and insurance of Iranian crude oil and products, valid until August 21. After the news landed, VLCC freight rates exploded in an instant. Quotes on the Middle East route surged to as high as WS 650–750, translating to freight rates of about $7.0m–$8.2m per day—roughly three times the level before the conflict. As of June 22, TD3C (Middle East–China) TCE reached $512k per day, up 574% year over year; TD15 (West Africa–China) reached $189k per day, up 203% year over year; and TD22 (U.S. Gulf–China) reached $155k per day, up 258% year over year. In the same period, strait passage volume also rebounded—from fewer than 1 vessel per day on average before the agreement to 7 vessels on June 22 (pre-war average of about 19 vessels per day).

Phase 3 (June 23 to June 30): Navigation whiplash, and freight rates “plunged off a cliff and avalanched.” However, the dawn of peace was fleeting. On June 23, the IMO initiated large-scale evacuation of seafarers; on June 25, a container ship was attacked on the Oman side; on June 26, Iran attacked ships in the strait again, casting doubts on the stability of the agreement framework. The U.S. and Iran accused each other of undermining the temporary ceasefire, and the situation returned to a high-risk state. Freight rates then turned sharply downward. TD3C fell rapidly from its $512k per day peak, and for the week ending June 26, the Middle East–China route was quoted at $288k per day, down 27% week over week. Even more dramatically, on June 26 alone, the Baltic Exchange assessed TD3C’s daily charter rate at $328k—down $107k from the previous day, a drop of about one quarter. Actual deal prices were even lower: trader Mercuria chartered a VLCC under the Onassis flag at just $202k per day. Capital markets reacted in parallel: on June 26, China Merchants Energy Shipping hit the daily limit down, COSCO SHIPPING Energy fell 9.09%, and China Merchants Nanjing Tanker Corp fell 8.57%.

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