Hormuz closure pushes ships into the Atlantic and drove tanker earnings higher in April

The tanker market in April was dominated by the closure of the Strait of Hormuz. With the Persian Gulf effectively closed, crude tanker earnings reached levels not seen in years. The driver was not broad-based demand growth but a severe geographic dislocation: with Middle East Gulf liftings near zero, the limited cargo available globally was concentrated in Atlantic Basin loading zones (mainly US), where available tonnage was scarce. Approximately 90 VLCCs, around 13 percent of the active mainstream fleet, had ballasted westward in anticipation of a prolonged closure, pushing the Atlantic VLCC count to a record 65 units. For owners who secured fixtures during the tightest period, the returns were exceptional. But the underlying signal was one of positioning and scarcity, not a structural demand uplift.

Ceasefire introduces repricing risk, with VLCCs most exposed to correction
The 7 April ceasefire between the US, Israel, and Iran initially improved the near-term outlook for tanker rates. However, the situation remains fluid, as a blockade of the Strait of Hormuz by both sides has reduced tanker traffic through the Strait to near zero. Iran briefly announced on 17 April that the Strait was open, and early cargo bookings at elevated rates signalled a potential return of Gulf activity. While this reopening was short-lived, the disruption has continued to support a strong tanker market.

With limited access to the Gulf, several crude tankers have repositioned to the Atlantic, leading to some easing in rates there. Still, overall market conditions remain firm, supported by shifting trade flows and solid demand.

Tanker rates are expected to stay elevated, even with some normalization, depending on how quickly vessels return to the Gulf and export flows recover.

Rate normalization likely, but structural tailwinds remain intact beneath the volatility
OPEC+ continues to unwind production cuts, with more than 2 million barrels per day added since the start of the phased reversal, directly supporting crude carrier utilization. US crude exports reached a new record during the month as Eastern buyers who normally purchased crude from the Gulf were forced to source alternative supply, a trend that is unlikely to fully reverse even after Hormuz reopens, as infrastructure will take a while to be rebuilt.

Additionally, at the end of April, UAE announced they will exit OPEC/OPEC+ on 1 May, citing national interest and a commitment to meeting market demand. The move follows growing tensions, as the UAE has invested heavily to expand production capacity to 5.0 million bpd by 2027, well above its current quota of 3.447 million bpd.

The decision is expected to support higher oil production and export volumes over time. It may also trigger speculation about other members reassessing their participation. Overall, this is likely to benefit tanker demand in the short to medium term, as more oil is produced and shipped to global markets.