The cost of shipping very large crude carriers on the Middle East-Asia route has exceeded $1.2 million a day amid the conflict over Iran and navigational complexities in the Strait of Hormuz, prompting Asian refineries to seek supplies from more distant regions.
Sharp rise on key shipping routes
Maritime brokerage Braemar estimated that rates for very large crude carriers, or VLCCs, with capacity of up to two million barrels, had doubled on the main Middle East-China route since the end of August.
The cost of shipping oil from Brazil to China rose by one-third in the past week alone, according to the company's estimates.
Charter rates exceed 2025 levels
VLCC charter rates ranged between $20,000 and $50,000 a day for most of 2025 before jumping to $120,000 a day in February amid a structural shortage of vessel capacity, according to data from the Baltic Exchange.
Freight rates have risen sharply. Shipping could become the factor that weakens this market in the near term, as the cost of crude delivered to Asia has risen to $150 a barrel
Longer voyages to Asian refineries
Navigational complexities around the Strait of Hormuz have prompted Asian oil refineries to seek crude from the Atlantic Ocean or the North Sea, extending vessel voyages to between 30 and 40 days.
Shipping costs currently account for between 20% and 40% of the final price of crude delivered to refineries, according to Argus.
The importance of the Strait of Hormuz to energy trade
The United States and Israel launched a war against Iran on February 28, after which Washington and Tehran signed a memorandum of understanding in June calling for an immediate halt to military operations. The United States resumed large-scale strikes on Iran on the night of July 8, accusing Tehran of violating agreements concerning the Strait of Hormuz.
Before the conflict, about 25% of global oil trade and 20% of liquefied natural gas passed through the Strait of Hormuz.
