Iran has set conditions for reopening that Washington has rejected, keeping Gulf crude exports constrained and tanker earnings elevated.

Reopening remains dependent on conditions Washington has rejected
Iran’s lead negotiator has stated that the Strait of Hormuz will remain closed until the United States lifts its naval blockade, removes oil sanctions and ends military operations. President Trump has said that no negotiations are currently taking place, leaving the situation at a standstill. Traffic through the waterway has fallen further in recent weeks as the risk of attacks on vessels remains elevated. Combined crude exports from Iran, Russia, Saudi Arabia and the United States have fallen by 5 million barrels per day over the past four weeks to a record low of 12 million barrels per day, while the IEA expects global oil supply to decline by 4.3 million barrels per day this year.

Crude flows shift west, keeping tanker earnings elevated
For tanker owners, the closure has shifted the market’s centre of gravity westward rather than simply reducing activity. Refiners unable to source Gulf barrels are turning to West Africa, the Americas and the Black Sea, pushing Suezmax earnings above USD 200,000/day, their highest level this year. Aframax earnings, meanwhile, have eased from recent highs in the North Sea and Mediterranean. The disruption is also increasingly reflected in longer-term pricing, with one-year charter rates and secondhand crude tanker values rising, alongside continued newbuilding activity. A negotiated reopening would likely return Gulf cargoes to Asian routes and put rapid downward pressure on spot earnings. Until then, sustained disruption should continue to support tanker earnings, although higher insurance costs could increasingly limit owners’ willingness to trade in the region.

Sources: Bloomberg, Clarksons Research, IEA & MB Shipbrokers