A failed ceasefire, rising regional tensions, and shifting trade patterns have strengthened tanker demand and increased tonne-mile requirements

Brief reopening gives way to renewed closure

July began with the Strait of Hormuz partially reopened following the ceasefire signed in mid-June. Crude flows from the Gulf had begun to recover, Brent had eased toward pre-conflict levels, and tanker traffic through the strait was slowly rebuilding. That improvement proved short-lived. Iran resumed attacks on commercial vessels, the United States struck Iranian military and port infrastructure and reimposed its naval blockade, and by mid-July both sides had declared the agreement void. Vessel transits through the strait have since fallen back to roughly 95 percent below pre-conflict levels in tonnage terms, with nearly 70 percent of remaining transits conducted with AIS (vessel tracking system) disabled. According to Straits.live, roughly 410 ships remain stranded on either side in the final week of July. Oil prices surged in response to the conflict extension, with Brent climbing from around USD 72 per barrel at the start of the month to near USD 100 by the final week.

Tanker earnings elevated across all crude segments

The return to crisis conditions has kept tanker rates at historically strong levels. VLCC, Suezmax, and Aframax spot earnings all remained well above long-term averages throughout the month, with Suezmax and Aframax segments showing particular strength in the second half of July. One-year timecharter rates have also firmed, reflecting growing confidence that the disruption will persist into the fourth quarter. Russia’s temporary ban on diesel exports has added further tightness to the product tanker complex, while Asian and European refiners have responded to Middle Eastern supply uncertainty by increasing purchases of US crude, supporting Atlantic Basin trade flows.

Multiple fronts of disruption and a fragile diplomatic track

Two late-month developments expanded the disruption beyond the Strait of Hormuz. Iran-backed Houthi forces announced a maritime embargo on Saudi Arabian ports, directly threatening the Yanbu Red Sea export route that has served as Saudi Arabia’s main alternative to the Gulf since the closure began. Separately, the EU adopted its 21st Russia sanctions package, for the first time targeting vessels that service Russia’s shadow fleet at sea and freezing the oil price cap on Russian crude at USD 44.10 per barrel. For investors, the tanker market remains supported by a rare combination of constrained fleet supply, elevated tonne-mile demand, and shrinking compliant tonnage. The key variable remains diplomacy: the US agreed to pause strikes on July 27 to allow more time for negotiations, and the speed of the original June ceasefire shows that conditions can shift rapidly in either direction.

Sources: Clarksons Research, CNN, EU Council, Lloyd’s List Intelligence, MB Shipbrokers, Reuters & Straits.live