Middle East conflict slows tanker bookings, lifts rates

SINGAPORE, June 16 (Reuters) - The costs of chartering tankers to move oil from the Middle East to Asia have climbed and ship bookings have slowed as the Israel-Iran conflict fuels worries of potential disruptions, industry sources told Reuters on Monday.
The global benchmark rate for a very large crude carrier (VLCC) moving oil from the Middle East Gulf (MEG) to Japan, known as TD3, rose over 20% on Friday after the tensions broke out, according to LSEG data.
On Monday, the MEG-Japan rate for crude held steady at about W55 on the Worldscale industry measure, according to a shipbroker.
However, further gains in freight rates were limited as traders, shipbrokers and charterers take a wait-and-watch stance even as market participants said they did not expect the Strait of Hormuz, a key shipping passage, to be shut.
"Fixing on Friday from the region all but came to a standstill. Physical marks may therefore not be indicative. Ships inside the gulf are still looking for outbound charters," said Anoop Singh, global head of shipping research at Oil Brokerage.
"But the situation remains dynamic, and we expect to hear more on market open today," said Singh.
"We have noted a minor increase in freight rates so far, but expect them to rise further as the week progresses," according to Sentosa Shipbrokers.
Emril Jamil, senior analyst for crude and fuel oil at LSEG Oil Research, said freight rates will depend on any continued escalation and potential action by Iran on the Strait of Hormuz. About 18 million to 19 million barrels per day of oil and oil products flow through the waterway, which connects the Gulf to the Gulf of Oman.
"The war risk premium is expected to remain high in the near-term given the continued exchange of tensions between the two countries. This will exponentially rise if other Middle East oil and gas infrastructure are attacked," said Jamil.
He added that cargo insurance premiums could range from an additional $3 to $8 a barrel if there are further attacks.
For clean products, freight rates to ship around 90,000 tons of either gasoline, diesel or jet fuel from the Middle East to markets west of the Suez Canal were at $3.3 million to $3.5 million late last week, before the conflict, according to estimates from three shipping sources, but new offer levels have yet to emerge.
Some brokers are already giving market indications at $4.5 million levels, according to one Singapore-based trade source.
Several shipowners are holding back offering vessels for routes in the Gulf until the situation becomes more clear, which may increase opportunities for voyages from the Far East to the west of Suez and from northwest India, Sentosa shipbrokers said in a note to clients.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

The Independent

2 hours ago

• The Independent

Japan and South Korea mark 60 years of ties despite lingering tension and political uncertainty

Japan and South Korea are marking the 60th anniversary of the normalization of their diplomatic relations Sunday. The two Asian powers, rivals and neighbors, have often had little to celebrate, much of their rancor linked to Japan's brutal colonial rule of Korea in the early 20th century. Things have gotten better in recent years, but both nations — each a strong ally of the United States — now face political uncertainty and a growing unease about the future of their ties. Here's a look at one of Northeast Asia's most crucial relationships, from both capitals, by two correspondents from The Associated Press. The view from Seoul, by Kim Tong-hyung South Korea's new liberal president, Lee Jae Myung, is determined to break sharply from the policies of his disgraced predecessor, Yoon Suk Yeol, who now faces a trial on charges of leading an insurrection over his imposition of martial law in December. Relations with Japan, however, are one area where Lee, who describes himself as a pragmatist in foreign policy, may find himself cautiously building on Yoon's approach. Before his removal from office in April, the conservative former president tried to repair relations with Japan. Yoon wanted to also tighten the countries' three-way security cooperation with Washington to counter North Korean nuclear threats. In 2023, Yoon announced a South Korea-funded compensation plan for colonial-era forced laborers. That decision caused a strong backlash from victims and their supporters, who had demanded direct payments from Japanese companies and a fresh apology from Tokyo. Yoon's outreach boosted tourism and business ties, but there's still lingering resentment in South Korea that Japan failed to reciprocate Seoul's diplomatic concession by addressing historical grievances more sincerely. While advocating for pragmatism and problem-solving in foreign policy, Lee has also long criticized Japan for allegedly clinging to its imperialist past and blamed that for hurting cooperation between the countries. Some experts say the stability of the countries' improved ties could soon be tested, possibly around the Aug. 15 anniversary of Korea's liberation from Japanese colonial rule at the end of World War II, when Lee is expected to publicly address the nation's painful history with Japan. Some in Seoul want Japanese Prime Minister Shigeru Ishiba to mark the anniversary with a stronger statement of remorse over Japan's wartime past to put bilateral ties on firmer ground. While wartime history will always linger in the background of Seoul-Tokyo relations, Lee and Ishiba may face a more immediate concern: U.S. President Donald Trump's rising tariffs and other America-first trade policies. South Korea's Hankyoreh newspaper in an editorial this week called for South Korea and Japan to 'collaborate immediately' on a joint response to Trump's policies, arguing that the proposed U.S. tariffs on automobiles pose similar threats to both countries' trade-dependent economies. The view from Tokyo, by Mari Yamaguchi Ishiba, eager to improve ties with Seoul, has acknowledged Japan's wartime aggression and has shown more empathy to Asian victims than his recent predecessors. His first encounter with Lee seemed positive, despite worries in Japan about South Korea's stance under a liberal leader known for attacks on Japan's wartime past. Lee, in that meeting with Ishiba at the G7, likened the two countries to 'neighbors sharing the same front yard' and called for building a future-oriented relationship that moves beyond their 'small differences and disagreements.' Ishiba and Lee agreed to closely communicate and to cooperate on a range of issues, including North Korea's nuclear and missile development. Under a 1965 normalization treaty, Japan provided $500 million in economic assistance to South Korea, saying all wartime compensation issues were settled. However, historical issues including forced labor and sexual abuse of Korean women during the war have disrupted ties over the decades, while South Korea has become an Asian power and a rival to Japan, and while Tokyo, especially during the late Prime Minister Shinzo Abe 's rule, has promoted revisionist views. Japan has since offered atonement money twice for the so-called 'comfort women,' an earlier semi-private fund and a second one unilaterally dissolved by former South Korean President Moon Jae-in's liberal government. Things have improved in recent years, and Japan is watching to see whether Lee sticks with his conservative predecessor's more conciliatory diplomacy or returns to the confrontation that marked previous liberal governments. Cooperation between the two sides is 'more essential than ever' to overcome their shared problems such as worsening regional security and Trump's tariffs that have shaken free trade systems, Japan's largest-circulation newspaper Yomiuri said in a recent editorial. At a 60th anniversary reception in Tokyo, Ishiba said that he sees 'a bright future' in the relationship. He expressed hope also for cooperation in 'common challenges' such as low birth rates and declining populations. ___ Kim reported from Seoul, South Korea.

Reuters

2 hours ago

• Reuters

Iran's Atomic Energy Organization says it will not allow nuclear development to stop

CAIRO, June 22 (Reuters) - Iran's Atomic Energy Organization said on Sunday it would not allow the development of its "national industry" - an apparent reference to the country's nuclear development - to be stopped. It also said the attacks on its nuclear sites violate international law, without clarifying the extent of the damage from the U.S. strikes that President Donald Trump announced earlier.

Sky News

2 hours ago

• Sky News

US warplanes transit through UK: Here's what the flight tracking data shows

Flight tracking data shows extensive movement of US military aircraft towards the Middle East in recent days, including via the UK. Fifty-two US military planes were spotted flying over the eastern Mediterranean towards the Middle East between Monday and Thursday. That includes at least 25 that passed through Chania airport, on the Greek island of Crete - an eight-fold increase in the rate of arrivals compared to the first half of June. The movement of military equipment comes as the US considers whether to assist Israel in its conflict with Iran. Of the 52 planes spotted over the eastern Mediterranean, 32 are used for transporting troops or cargo, 18 are used for mid-air refuelling and two are reconnaissance planes. Forbes McKenzie, founder of McKenzie Intelligence, says that this indicates "the build-up of warfighting capability, which was not [in the region] before". Sky's data does not include fighter jets, which typically fly without publicly revealing their location. An air traffic control recording from Wednesday suggests that F-22 Raptors are among the planes being sent across the Atlantic, while 12 F-35 fighter jets were photographed travelling from the UK to the Middle East on Wednesday. Many US military planes are passing through UK A growing number of US Air Force planes have been passing through the UK in recent days. Analysis of flight tracking data at three key air bases in the UK shows 63 US military flights landing between 16 and 19 June - more than double the rate of arrivals earlier in June. On Thursday, Sky News filmed three US military C-17A Globemaster III transport aircraft and a C-130 Hercules military cargo plane arriving at Glasgow's Prestwick Airport. Flight tracking data shows that one of the planes arrived from an air base in Jordan, having earlier travelled there from Germany. What does Israel need from US? Israeli Prime Minister Benjamin Netanyahu said on 15 March that his country's aim is to remove "two existential threats - the nuclear threat and the ballistic missile threat". Israel says that Iran is attempting to develop a nuclear bomb, though Iran says its nuclear facilities are only for civilian energy purposes. A US intelligence assessment in March concluded that Iran is not building a nuclear weapon. President Trump dismissed the assessment on Tuesday, saying: "I think they were very close to having one." Forbes McKenzie says the Americans have a "very similar inventory of weapons systems" to the Israelis, "but of course, they also have the much-talked-about GBU-57". The GBU-57 is a 30,000lb bomb - the largest non-nuclear bomb in existence. Mr McKenzie explains that it is "specifically designed to destroy targets which are very deep underground". Experts say it is the only weapon with any chance of destroying Iran's main enrichment site, which is located underneath a mountain at Fordow. Air-to-air refuelling could allow Israel to carry larger bombs Among the dozens of US aircraft that Sky News tracked over the eastern Mediterranean in recent days, more than a third (18 planes) were designed for air-to-air refuelling. "These are crucial because Israel is the best part of a thousand miles away from Iran," says Sky News military analyst Sean Bell. "Most military fighter jets would struggle to do those 2,000-mile round trips and have enough combat fuel." The ability to refuel mid-flight would also allow Israeli planes to carry heavier munitions, including bunker-buster bombs necessary to destroy the tunnels and silos where Iran stores many of its missiles. Satellite imagery captured on 15 June shows the aftermath of Israeli strikes on a missile facility near the western city of Kermanshah, which destroyed at least 12 buildings at the site. At least four tunnel entrances were also damaged in the strikes, two of which can be seen in the image below. Writing for Jane's Defence Weekly, military analyst Jeremy Binnie says it looked like the tunnels were "targeted using guided munitions coming in at angles, not destroyed from above using penetrator bombs, raising the possibility that the damage can be cleared, enabling any [missile launchers] trapped inside to deploy". "This might reflect the limited payloads that Israeli aircraft can carry to Iran," he adds. Penetrator bombs, also known as bunker-busters, are much heavier than other types of munitions and as a result require more fuel to transport. Israel does not have the latest generation of refuelling aircraft, Mr Binnie says, meaning it is likely to struggle to deploy a significant number of penetrator bombs. Israel has struck most of Iran's western missile bases Even without direct US assistance, the Israeli air force has managed to inflict significant damage on Iran's missile launch capacity. Sky News has confirmed Israeli strikes on at least five of Iran's six known missile bases in the west of the country. On Monday, the IDF said that its strategy of targeting western launch sites had forced Iran to rely on its bases in the centre of the country, such as Isfahan - around 1,500km (930 miles) from Israel. Among Iran's most advanced weapons are three types of solid-fuelled rockets fitted with highly manoeuvrable warheads: Fattah-1, Kheibar Shekan and Haj Qassam. The use of solid fuel makes these missiles easy to transport and fast to launch, while their manoeuvrable warheads make them better at evading Israeli air defences. However, none of them are capable of striking Israel from such a distance. Iran is known to possess five types of missile capable of travelling more than 1,500km, but only one of these uses solid fuel - the Sijjil-1. On 18 June, Iran claimed to have used this missile against Israel for the first time. Iran's missiles have caused significant damage Iran's missile attacks have killed at least 24 people in Israel and wounded hundreds, according to the Israeli foreign ministry. The number of air raid alerts in Israel has topped 1,000 every day since the start of hostilities, reaching a peak of 3,024 on 15 June. Iran has managed to strike some government buildings, including one in the city of Haifa on Friday. And on 13 June, in Iran's most notable targeting success so far, an Iranian missile impacted on or near the headquarters of Israel's defence ministry in Tel Aviv. Most of the Iranian strikes verified by Sky News, however, have hit civilian targets. These include residential buildings, a school and a university. On Thursday, one missile hit the Soroka Medical Center in Beersheba, southern Israel's main hospital. More than 70 people were injured, according to Israel's health ministry. Iranian foreign minister Abbas Araghchi said that Iran had struck a nearby technology park containing an IDF cyber defence training centre, and that the "blast wave caused superficial damage to a small section" of the hospital. However, the technology park is in fact 1.2km away from where the missile struck. Photos of the hospital show evidence of a direct hit, with a large section of one building's roof completely destroyed. Iran successfully struck the technology park on Friday, though its missile fell in an open area, causing damage to a nearby residential building but no casualties. Israel has killed much of Iran's military leadership It's not clear exactly how many people Israel's strikes in Iran have killed, or how many are civilians. Estimates by human rights groups of the total number of fatalities exceed 600. What is clear is that among the military personnel killed are many key figures in the Iranian armed forces, including the military's chief of staff, deputy head of intelligence and deputy head of operations. Key figures in the powerful Revolutionary Guard have also been killed, including the militia's commander-in-chief, its aerospace force commander and its air defences commander. On Thursday, Israeli Prime Minister Benjamin Netanyahu said that US assistance was not necessary for Israel to win the war. "We will achieve all our objectives and hit all of their nuclear facilities," he said. "We have the capability to do that." 3:49 Forbes McKenzie says that while Israel has secured significant victories in the war so far, "they only have so much fuel, they only have so many munitions". "The Americans have an ability to keep up the pace of operations that the Israelis have started, and they're able to do it for an indefinite period of time." Additional reporting by data journalist Joely Santa Cruz and OSINT producers Freya Gibson, Lina-Sirine Zitout and Sam Doak.