War tanks the oil tanker pricing playbook

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WHAT WE’RE TRACKING TODAY

TODAY: Is the tanker market now pricing risk more than cargoes?

Good morning, friends. Despite US President Donald Trump signaling that the war will end “very soon,” drone and missile attacks have again targeted an energy facility in the UAE.

Surprise, surprise — shipping and trade are still feeling the ripple effects of the regional war. Tankers are adjusting on the fly, rerouting, and recalculating ins. as costs climb. Meanwhile, Egypt is putting Berenice port back on the map — courting investors for it and other key logistics zones. Let’s dive in…

Watch this space

SHIPPING — DP World launches a bonded land bridge to bypass port disruptions: DP World enacted a temporary contingency arrangement to allow customers to reroute import containers from Khorfakkan and Fujairah ports to Dubai’s Jebel Ali via bonded road transit, according to a statement. Under the new system, DP World will coordinate the trucking movement of both import and freezone shipments to ensure cargo continues to flow despite the current regional situation. Final customs clearance and duty payments on the goods will remain centralized at Jebel Ali.

So did Abu Dhabi Ports, which yesterday shared a notice (pdf) informing its customers of the temporary operational arrangement allowing them to reroute containers from Khorfakkan and Fujairah ports to Abu Dhabi’s Khalifa Port through customs bonded transit by truck or rail.

Why this matters: The UAE is using its internal road infrastructure to minimize trade disruptions. By moving goods under bond, DP World allows companies to offload cargo at the country’s eastern ports — just outside the Strait of Hormuz — while maintaining the administrative and customs convenience of Jebel Ali.

Alternative gateways are emerging through the haze: Oman’s Salalah port remains a key safe transshipment hub as it sits outside the strait — Maersk and Hapag-Lloyd continue to call at Salalah, despite dropping Jebel Ali.

REMEMBER- Major shipping giants MSC, Maersk, Hapag-Lloyd, Cosco, and CMA CGM have all suspended new transits in the Persian Gulf, diverting Gulf-bound vessels.

AUTOMOTIVE — Hormuz closure triggers car market paralysis: While used vehicles could become a primary market focus due to an expected decline in demand for premium brands in a high-price environment, as we reported last week, the closure of the Strait of Hormuz has paralyzed a corridor for Japanese and South Korean used-vehicle exports, Nikkei Asia reports. The halt on re-exports through the UAE is expected to trigger a supply crunch and jack up prices across Middle Eastern and African markets.

AVIATION — Air cargo plummeted 22% last week as disruptions mount. Shipments ranging from perishables to aerospace components are in limbo after the escalating regional conflict halted supply chains through Doha and Dubai. The impact is most severe on the Asia-Middle East-Europe corridor, where capacity has been slashed by 39%.

Why this matters:For regional operators, this cements the idea that the “Middle East hub” model is being jeopardized, as shippers face a 5% spike in air rates to the US and a massive surge in maritime war risk premiums.

DATA POINT- Airspace closures and flight cancellations last week withdrew some 12% of global air cargo capacity from the market instantaneously.

Market watch

Oil prices fell this morning after reports from the IEA may release record reserves to curb spikes from the regional war, Reuters reports. Brent crude futures declined USD 0.23 to trade at USD 87.57 / bb by 00.23 GMT, while US West Texas Intermediate (WTI) slipped USD 0.37 to USD 83.08 / bbl.

Meanwhile, closer to home: The Middle East’s oil machine is slowing to a crawl: The UAE, Saudi Arabia, Iraq, and Kuwait have cut production by some 6.7 mn bbl / d — shaving some 6% of global oil supply, Bloomberg reports, citing people familiar with the matter. Iraq has trimmed some 2.9 mn bbl / d, Saudi roughly 2.5 mn bbl / d, the UAE 500k-800k bbl / d, and Kuwait about 500k bbl / d. For Saudi Arabia, the UAE, and Kuwait, that translates to roughly 20-25% below February output levels.

The spillover: The crisis is triggering a “severe chain reaction” across shipping, ins., aviation, agriculture, and automotive supply chains,” Aramco’s CEO Amin Nasser said, noting that global inventories are already sitting near five-year lows.

The Baltic Index rebound didn’t last: The Baltic Exchange’s dry bulk sea which tracks rates for the capesize, panamax, and supramax vessel segments — fell 7.1% to 1,919 points on Tuesday, its lowest since 10 February. The capesize slid 11.8% to 2,502 points, while the panamax index decreased 2.7% to 1,861. The smaller supramax index declined by 2.3% to 1,342 points.

Data point

Egypt’s non-oil private sector continued to contract in February, with the headline S&P Global Purchasing Managers’ Index (PMI) falling to 48.9 from 49.8 in January, according to S&P’s report (pdf). The dip marks the end of a three-month expansion streak — the longest growth streak since late 2020 — as softening demand and accelerating cost pressures forced firms to scale back operations. Despite the slip below the 50.0 neutral threshold, the reading remained above the survey’s long-run average of 48.3.

Both output and new orders saw declines in February, with new orders contracting at their fastest rate in five months and a notable drop in sales across the manufacturing, services, and wholesale and retail sectors. Construction was the lone bright spot, reporting an improvement in order volumes amid the broader slowdown.

The big culprit? Input costs. Average price pressures went up substantially, hitting their highest level since May 2025. Businesses reported being squeezed by a surge in global prices for oil and metals, which drove up import expenses. While costs are soaring, most firms are reluctant to pass those hikes onto customers, choosing instead to eat the difference and let their margins take the hit, explains David Owen, senior economist at S&P Global Market Intelligence.

“Egyptian non-oil companies were notably exposed to the uplift in global commodity prices,” said Owen. Firms will be looking for commodity markets to settle, as high input inflation has historically been the primary constraint on local output, he said.

PSA

MSC offers inland alternatives to Hormuz: Global shipping giant MSC has alerted its customers of solutions for inland cargo transport, connecting King Abdullah and Jeddah ports to ports in the Arabian Gulf, it said in a statement. The Dragon and Jade services allow cargoes to bypass the Strait of Hormuz on their way to Asian destinations.

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Tankers are now loading risk

!_StoryTags_!, trade, SHIPPING + MARITIME, UAE, Oman,

Has the crude tanker market gone from a normal supply-demand market to a live risk-price screen? In the last two weeks, the big benchmark routes have been repriced less by “how many cargoes” and more by “how many owners will actually send a ship.” Owner willingness has collapsed as Hormuz becomes a war zone.

The scale shows up clearly in data: On the benchmark Baltic Exchange VLCC route from Middle East Gulf to China (TD3C), assessed earnings have shifted from “very strong” to panic-level prints in days. For TD3C, it was USD 206k per day on 26 February, but after the outbreak of the war it was USD 423.7k per day on 2 March, while market benchmarks put early-March assessments in the range of USD 486k per day. Gibson Shipbrokers had the TD3C route at USD 506k per day late in the first week of March vs USD 215k per day in late February — a 136% jump in a week.

Rates were already climbing before the war: The Middle East-China VLCC route earnings were reported at USD 170k per day on 24 February.

But the market is also warning you not to take every print literally: Lloyd’s List flagged that extreme index spikes can be driven by very few fixtures and may not hold if agreements fail or remain unconfirmed — which matters a lot if freight is now indexed.

A quick crash course on how freight forward agreements work: Say, for example, the current freight rate for a VLCC route is USD 40k per day. A trader then thinks rates will spike because of geopolitical risk, so they buy a freight forward contract (FFA) that locks in USD 40k per day for the next month. If the actual rate becomes USD 60k per day, they make the difference — if it drops to USD 30k per day, they lose. No ship movement, it’s purely financial — think derivatives.

And a quick translation for non-shipping readers: Tanker freight is often quoted in Worldscale points (WS) first — a standard reference cost for transporting oil on a route. WS 100 represents the benchmark reference cost of a voyage. TD routes are the benchmark voyages, so when the benchmark Middle East-China route, known as TD3C, jumps to levels like WS 400 or higher, it signals that charterers are paying four times the normal cost for transporting crude. Brokers then convert WS into an earning number (TCE, time-charter equivalent) to express it as USD per day.

The domino effect: When TD3C blows out, it pushes the West Africa-Europe (TD20), Black Sea-Mediterranean (TD6), and Atlantic basin routes up as refiners substitute cargoes from outside the Gulf and tanker demand shifts across basins.

Supply squeeze and fleet utilization

The market move makes more sense once you look at effective supply: When ships idle at anchorage, take longer routes, or refuse a zone, you shrink the number of cargoes the fleet can deliver per month — even if the world fleet size hasn’t changed. Right now, the utilization shock is visible in three hard indicators:

First, anchorages filled up: At least 150 tankers dropped anchor beyond Hormuz at the beginning of March, and at least another 100 anchored outside Hormuz along the UAE and Oman coasts. Later estimates put “at least 200 ships” (mixed types, including tankers) at anchor off major Gulf producers by 4 March.

Second, transit collapsed: Tanker transits — of all types — through Hormuz fell from 50 in late February, hitting almost zero in the first week of March vs a historical average of some 140 vessel transits per day.

Third, mainstream tonnage got trapped or repositioned: Nearly 10% of mainstream oil tankers are trapped near Hormuz, while 3.2k ships are idling inside the Arabian Gulf, with 500 waiting outside — which is huge friction even if not all are tankers.

ICYMI- Currently, 35 VLCCs are idling on the eastern side of the strait, with another 22 steaming toward the Gulf from the Indian coast.

Floating storage and congestion

The market impact is also about ships being forced into waiting mode. Large anchorages as well as near-zero transits create two overlapping effects. First, they reduce effective fleet supply — a ship at anchor is not completing voyages — which is freight-bullish in the short run.

It also starts to build “trapped barrels.” Estimated oil volumes stranded on tankers in the Middle East Gulf rose by some 85 mn barrels since the conflict began. If that’s right, storage saturates and producers start shutting — which is already happening. Less export volume eventually becomes freight-bearish — because you can’t ship what isn’t produced.

So the tanker market is doing two things at once — pricing a shortage of available ships now, while anxiously watching for a shortage of available cargoes later.

What comes next

If escorted transits and stabilized ins. terms arrive fast, you get a “reopening rally unwind”: Rates can fall hard even if the war continues, because the backlog clears and the fear premium leaks out. Talks of US escorts have resurfaced alongside state-backed ins. ideas, but nothing like a clean corridor yet.

If paralysis drags on, you can keep outsized spot prints — but also more “paper vs physical” fights. Both Gibson and Baltic benchmarks explicitly describe parts of the curve as theoretical/uncertain because the market isn’t fixing normally. That matters because many shipping contracts are linked to benchmark freight indexes, while traders hedge exposure through freight forward agreements. When only a handful of fixtures set those benchmarks, small price swings can ripple through the entire tanker market. Lloyd’s List quotes multiple brokers warning that rumours are rife and unconfirmed rates aren’t being "publicized or confirmed.”

For now, the tanker market is pricing a shortage of ships. But if exports begin to shut because storage fills and production slows, the shortage could flip. Freight markets may soon discover the harder problem isn’t finding ships — it’s finding cargo.

Other freight markets are reacting differently

Container shipping has reacted far more calmly so far: “Ocean container price increases have been limited just to containers directly impacted by the closure of Hormuz, meaning limited to emergency surcharges for containers already headed for the Gulf states or area,” Judah Levine, head of research at Freightos, told EnterpriseAM, noting that rising fuel costs are already resulting in fuel surcharges being announced, so fuel prices may start to have an impact on container rates.

Recent increases in container freight rates are likely tied to the usual post-Chinese new year demand pickup rather than the gulf crisis. “So these increases are likely not related to the Hormuz closure, though the fuel increases could start showing up as a component of rate levels once they are introduced, and could push prices higher than they would've been otherwise, but not to extremes for now, Levine told us.

Berenice Port is back on the block

Egypt’s Transport Ministry has re-offered the right to operate and develop Berenice International Port after Kuwait’s Alghanim Group was withdrawn from the project last month, three government sources tell EnterpriseAM. The ministry is working with the General Authority for Investment and Freezones to find an investor for the public-private partnership, we were told.

REMEMBER- The ministry decided to take the reins of the project due to a lack of progress on infrastructure and the submission of technical proposals, despite interest and requests from shipping agencies and international shipping lines to operate within the port, a senior government source told us at the time. The reasons for Alghranim’s withdrawal were not disclosed, but our source said that uncertainty regarding the Suez Canal waterway, the timeline for recovery of traffic through the strait, and the return of international shipping agencies to the Bab El Mandeb region may have played a part.

The details: The project includes a 1.2 km-long cargo quay with a depth of 17 meters and a 1.1 mn sqm logistics area designed to handle large cargo ships and integrate port operations with inland logistics corridors.

The ministry has also separately offered Nuweiba Seaport for private investment, covering completion of port infrastructure and operational management, in addition to the construction of a nearby yacht marina, the sources said. A tender is also live for the construction of a yacht marina at El Quseir port on the Red Sea, we were told.

On land, the ministry is also rolling out a string of integrated logistics zone projects to investors, which are designed to streamline cargo flow, reduce port congestion, and integrate maritime, river, and land transport, maximizing economic returns and supporting regional trade growth.

The network will cover Egypt’s key trade arteries and include West Alexandria Port, the Tahya Misr 2 terminal, Sadat City, Kom Abu Radi in Beni Suef, and Port Tawfiq. It also includes Arqin on the Egyptian-Sudanese border and Gargoub on the Mediterranean to support trade with the country’s African neighbours.

There are plans for additional logistics zones along the Nile, including Dandara River Port in Qena, which aim to improve inland cargo movement and link river transport to national supply chains.

Al Ruwais gets hit

Another oil facility hit in the UAE: Adnoc halted operations at its Ruwais oil refinery — one of the world’s largest — following a drone strike that resulted in a fire at the Ruwais Industrial Complex, where the refinery is located, Bloomberg reports, citing people it says are familiar with the matter. Abu Dhabi authorities said they were trying to contain the blaze as of midday yesterday, according to a post on X. No injuries have been reported so far.

IN CONTEXT- The refinery is the UAE’s largest and the only one in Abu Dhabi, with a processing capacity of over 900k bbl / d of oil. The rest of the UAE’s refining capacity is located at the Enoc refinery in Dubai and smaller plants in Sharjah and Fujairah, which primarily process heavy crudes and fuel oil.

This follows a series of attacks last week and earlier this week on the Fujairah Oil Industry Zone.

The complex is also home to a host of Adnoc’s facilities, including those of chemical maker Borouge and fertilizer producer Fertiglobe. Adnoc is also currently building a massive LNG export terminal at the site. T’aziz — a JV between Adnoc and ADQ — is also developing a wider chemicals complex and transition fuels site there, which is expected to contribute some AED 183 bn to the economy — targeting 4.7 mn tons in annual capacity.

Iran’s drone strikes triggered a wave of energy asset disruptions across the Gulf last week, with Saudi Arabia temporarily suspending operations at its largest refinery and Qatar halting liquefied natural gas exports.

With ongoing disruptions and the Strait of Hormuz still closed, refineries might need to “reduce their production to the level required to meet domestic demand,” Justin Alexander, director of Khalij Economics and GCC analyst for GlobalSource Partners, tells EnterpriseAM.

Targeting oil facilities could also mean a slower recovery once the Strait reopens: “Any serious damage [to refineries] could impact the restart time to normal operations once the Strait reopens. The shut in of exports, beyond what can be piped or trucked to Fujairah, remains the main economic impact from the war.”

The disruptions have already forced oil producers across the region to slash output — a move aimed at delaying a complete shutdown as storage fills up, Bloomberg reports, citing a person it says is in the know. Meanwhile, Adnoc said it was “managing offshore production” due to storage constraints while still using export capacity that bypasses the Strait of Hormuz to continue exports, alongside its global storage network.

DP World taps new regional CEO for the GCC

DP World names new GCC CEO: UAE ports giant DP World has appointed Ahmed Yousef Al-Hassan (LinkedIn) as chief executive officer and managing director for the GCC. Al-Hassan will lead the group’s regional portfolio, including ports, terminals, logistics, marine services, and trade solutions. Al-Hassan previously served as chief financial officer for DP World’s GCC business and earlier led finance for the company’s Asia Pacific operations.

The ports giant recently shuffled its leadership team, appointing longtime executive Yuvraj Narayan as group CEO, with the former CFO stepping into the role after Sultan Ahmed bin Sulayem resigned.

Noatum picks new VP for Global Ocean Freight: Noatum Logistics has tapped Joachim Schaut (LinkedIn) as senior vice president for Global Ocean Freight. Schaut previously held leadership roles at DB Schenker and DSV and brings over 20 years of experience in ocean freight operations and carrier relations.

Aramco hit by lower prices and higher operating costs

Lower crude prices drag Aramco’s 4Q and FY 2025 earnings

Higher operating costs weighed on Saudi Aramco’s bottom line for 4Q 2025 — which fell 20.5% y-o-y to USD 17.8 bn, according to an earnings release (pdf). The firm’s revenue and other sales income slipped 2.9% y-o-y to USD 111 bn, driven by lower crude prices.

Lower crude, refined product, and chemicals prices knocked down Aramco’s net income for FY 2025 12.1% y-o-y to USD 93.4 bn, according to an earnings release (pdf). Revenue and other sales income fell 7.2% y-o-y to USD 445.7 bn, though higher sales volumes across refined and chemical products, gas, and crude oil, partly cushioned the decline.

Calendar

2026

MARCH

9-13 March (Monday-Friday): World Cargo Alliance Worldwide Conference, Singapore.

10-12 March (Tuesday-Thursday): World Cargo Symposium, Lima, Peru.

18-19 March (Wednesday-Thursday): IntraLogisteX, Birmingham, United Kingdom.

18-19 March (Wednesday-Thursday): Green Marine Transport Conference, Amsterdam, The Netherlands.

26 March (Thursday): Gulf Ship Finance Forum, Dubai, UAE.

APRIL

12-15 April (Sunday-Wednesday): Saudi Smart Logistics, Riyadh, Saudi Arabia.

16-17 April (Thursday-Friday): Global Supply Chain and Logistics Summit, Amsterdam, The Netherlands.

23-24 April (Thursday-Friday): Sustainability World Summit, Frankfurt, Germany.

28-30 April (Tuesday-Thursday): Mediterranean Ports and Logistics, Porto, Portugal.

MAY

12-14 May (Tuesday-Thursday): The Airport Show, Dubai, UAE.

12-14 May (Tuesday-Thursday): Aviation Energy Forum (AEF), Paris, France.

12-14 May (Tuesday-Thursday): Seamless Middle East, Dubai, UAE.

19-21 May (Tuesday-Thursday): Ground Handling Conference (IGHC), Cairo, Egypt.

19-21 May (Tuesday-Thursday): Terminal Operations Conference & Exhibition, Hamburg, Germany.

JUNE

2-4 June (Tuesday-Thursday): ProPak Mena, Cairo, Egypt.

4-5 June (Thursday-Friday): Supply Chain and Logistics Summit, Amsterdam, Netherlands.

6-8 June (Saturday-Monday): IATA World Air Transport Summit, Rio de Janeiro, Brazil.

10-11 June (Wednesday-Thursday): Black Sea Ports and Logistics, Istanbul, Turkey.

22-23 June (Monday-Tuesday): Decarbonizing Shipping Forum, Rotterdam, Netherlands.

AUGUST

30-1 August (Sunday-Tuesday): Air Cargo Middle East, Riyadh, Saudi Arabia.

30-1 August (Sunday-Tuesday): Saudi Warehouse and Logistics Expo, Riyadh, Saudi Arabia.

SEPTEMBER

16-17 September (Wednesday-Thursday): Saudi Maritime & Logistics Congress, Dammam, Saudi Arabia.

28-30 September (Monday-Wednesday): Transport Logistics Middle East, Riyadh, Saudi Arabia.

OCTOBER

21-22 October (Wednesday-Thursday): Global Ports Forum, Singapore.

26-29 (Monday-Thursday): Air Cargo Forum, Miami, US.

27-29 October (Tuesday-Thursday): Routes World, Riyadh, Saudi Arabia.

NOVEMBER

2-5 November (Monday-Thursday): ADIPEC Maritime and Logistics Exhibition and Conference, Abu Dhabi, UAE.

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War tanks the oil tanker pricing playbook

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TODAY: Is the tanker market now pricing risk more than cargoes?