Strait of Hormuz Tanker Rates and War-Risk Insurance in 2026

How high are tanker rates through the Strait of Hormuz?

The Baltic Exchange's TD3C route prices a 270,000-tonne cargo from the Middle East Gulf to China. It is the reference rate for very large crude carriers (VLCCs). In the late-January report, before the war began on 28 February, TD3C stood at Worldscale (WS) 126.5. That gave a round-trip time-charter equivalent (TCE) of $112,394 a day ^[1]. By the report of 15 October, the route had reached WS1,318.75 and $1,412,594 a day ^[6].

The path was not a straight line. TD3C paid $356,483 a day at the end of March and $382,397 in late July ^[2,3]. From August rates climbed again, to close to $585,000 a day by late in the month ^[4]. By late September TD3C paid $1,235,414 a day ^[5].

Shipbrokers told Bloomberg that some Gulf voyages have been fixed at up to $40 million, or as much as $4 million a day ^[7]. Baltic Exchange assessments show Middle East–East Asia supertanker earnings up more than 4,400% this year, Enterprise AM reported ^[7]. Vortexa counted about 60 VLCCs shuttling in and out of the strait in late September, against seven in April ^[7].

The benchmark itself is now disputed. Commodity trader Mercuria has taken the Baltic Exchange to the English High Court. It argues that TD3C should have been suspended once Hormuz traffic collapsed ^[8]. The exchange says the claim is "without merit" and that passage through the strait remained possible ^[8]. The trial opened in London this week ^[8].

Why have Suezmax and Aframax rates risen too?

Charterers have split crude cargoes across smaller ships. The International Energy Agency (IEA) measures this in tonne-miles. On that basis, Suezmax and Aframax demand in the third quarter was about 20% above a year earlier ^[9]. Longer voyages, congestion and ship-to-ship transfers have also cut fleet efficiency ^[9].

The effect shows in Atlantic routes far from the Gulf. The Suezmax TD20 route from Nigeria to the UK Continent earned about $561,600 a day in mid-October, against $66,725 in late January ^[6,1]. On the Black Sea TD6 route, Suezmax earnings were just over $816,600 a day ^[6].

A VLCC shortage has also built up in the Atlantic. Ballast VLCCs heading there fell to a six-year low on 15 October, according to an analysis published by Cyprus Shipping News ^[17]. US Gulf–Ningbo VLCC freight averaged $35 a barrel in October, six times its level a year earlier ^[17].

What has happened to product tanker rates?

Product tankers carry refined fuels such as diesel and jet. Their market changed in two ways. Clean cargoes loaded in the Persian Gulf fell sharply, while owners moved Long Range 2 (LR2) ships into crude service.

BIMCO says clean product volumes on LR2s fell 28% in the first nine months of 2026 ^[10]. Persian Gulf clean loadings on LR2s dropped from 1.2 million barrels a day in 2025 to 0.4 million ^[10]. Crude and heavy product volumes on the same ships rose by 1.8 million barrels a day ^[10]. Shipbroker Gibson said at least 100 coated LR2s were working in dirty service in late September ^[11].

That left fewer ships for clean cargoes. In mid-October the LR2 route from the Gulf to Japan (TC1) earned $267,600 a day ^[6]. The Medium Range (MR) route to East Africa (TC17) earned $113,400 ^[6]. In late January they paid $45,000 and $31,500 ^[1]. The IEA put Long Range 1 freight from the Gulf to Japan at nearly $27 a barrel in mid-October ^[9]. That is five times the pre-war level ^[9].

How much does war-risk insurance cost in Hormuz?

War-risk insurance is bought for each voyage into the danger zone. It is priced as a share of the ship's hull value. Before the war, the rate was about 0.25%, according to Marcus Baker, global head of marine at broker Marsh ^[12].

Rates have tracked the conflict closely. They eased to about 2% after the June memorandum between the US and Iran, the Lloyd's Market Association's Neil Roberts told Xinhua ^[12]. By late July they had reached 7.5% to 10%, Baker told S&P Global ^[12,13]. They eased only to 3% to 8% by late August ^[12].

In October, brokers put additional premiums for tankers at 6% to 10% of hull value ^[12]. That can mean up to $20 million for a single supertanker voyage into the Gulf ^[12]. The London market's position is that cover remains "available for a price" ^[12].

Claims are also rising. A Howden Re estimate put market-wide war, terror and political violence claims at $2 billion to $3 billion ^[12]. That exceeds the segment's estimated annual premium of $1.5 billion to $2 billion ^[12]. The container ship GFS Pride sank in the strait on 13 October, a total loss for hull war underwriters ^[12].

Is the Red Sea route a cheaper alternative?

Saudi Arabia's main bypass leads to the Red Sea, but that coast now carries its own risk. In July Yemen's Houthi group declared a naval blockade of Saudi Arabia ^[13]. S&P Global then put premiums at 0.5% of hull value for the Bab el-Mandeb, against 0.1% near western Saudi Arabia ^[13].

By late September, premiums for Saudi-linked tankers calling at Yanbu had tripled to about 3%, Reuters sources said ^[14]. In early July they were below 1% ^[14]. At ports further south, such as Jizan, quotes could reach 7%, while Hormuz voyages ran at 6% to 9% ^[14]. A Yanbu voyage could carry about $3 million in war-risk cover, against at least $100,000 before the war ^[14].

How dangerous is the strait for shipping now?

The Joint Maritime Information Center (JMIC) counted 156 confirmed incidents across the region since 1 March ^[15]. Its 25 October advisory kept the Hormuz threat level at "severe" and said further deliberate attacks were highly likely ^[15]. It estimated about 492 vessels waiting outside the strait ^[15].

The UK Maritime Trade Operations (UKMTO) centre has kept reporting attacks. On 23 October a tanker was disabled by a projectile while leaving the strait ^[15]. On 29 October a small boat attached two explosive devices to a tanker about 25 nautical miles north-east of Khasab, Oman ^[16]. The fire was put out and the crew were safe ^[16]. Iran's Revolutionary Guard said several tankers were hit on routes it calls unauthorised ^[16]. US Central Command says the main lanes are clear of mines ^[16].

What does freight do to delivered crude prices?

Goldman Sachs puts the global average crude freight rate above $20 a barrel, against $3 a year earlier ^[18]. It attributes $7 of the rise to the Hormuz war-risk premium ^[18]. Ship-to-ship transfers outside the Gulf and dearer marine fuel add $4 each ^[18].

Freight now shapes relative crude prices. On 5 October Abu Dhabi's Murban traded at $110 a barrel while Brent was quoted at $102.31, Gulf News reported ^[19]. The paper linked the split to tanker shortages, insurance and longer voyages ^[19].

Location also matters within the Gulf. Ras Tanura–Ningbo VLCC freight averaged about $12 a barrel more than Fujairah–Ningbo over the past four weeks ^[17]. Cargoes loaded outside the strait avoid that leg ^[17]. Atlantic crude to Asia cost $8 to $16.50 a barrel more to ship than crude from Fujairah ^[17].

Morgan Stanley says expensive freight favours short-haul Brent ^[20]. It raised its fourth-quarter Brent forecast to $105 a barrel ^[20]. Long-haul grades from Brazil, West Africa and the US have had to discount to compete in north-west Europe, the bank said ^[20].

What to watch

• Diplomacy. A lasting return to normal Hormuz traffic would lower freight, investingLive noted in its report on the Morgan Stanley call ^[20]. That would remove this support for Brent ^[20].
• Attacks and insurance. More shuttle tankers are unlikely to lower rates while attacks remain a threat, Kpler's Muyu Xu told Bloomberg ^[7].
• The TD3C case. The route underpins charter contracts and billions of dollars in derivatives ^[8]. The ruling matters well beyond the two parties.
• Product tankers. BIMCO expects LR2s to keep relying on crude and heavy product cargoes ^[10].
• Atlantic tightness. Fewer ballast VLCCs in the Atlantic could keep long-haul freight high even if Gulf rates ease ^[17].

Alupetra follows crude, product and freight markets daily; our price pages and crack spread calculator are updated every morning.