The Iran–Israel conflict is a long-standing and complex geopolitical struggle, largely defined by deep ideological, strategic, and regional rivalries. Tensions between Iran and Israel escalated sharply following an Israeli airstrike on Iran. The strike was a deliberate attempt to neutralize Iran’s potential nuclear capabilities.

• June 13, 2025 – Israel carried out an airstrike on Iran, followed by additional strikes on Iranian missile infrastructure and nuclear sites, reportedly killing senior IRGC commanders and nuclear scientists
• June 13–16 – Iran launched over 400 ballistic missiles and hundreds of drones against multiple Israeli cities – such as Tel Aviv – resulting in both civilian and military casualties and widespread infrastructure damage
• June 22 – The United States conducted its first direct military strikes targeting Iran’s nuclear facilities
• June 22 – In response, Iran’s parliament voted to potentially close the Strait of Hormuz, a critical transit route for about 20% of global oil. While this marks an escalation of the conflict, an actual shutdown remains unlikely due to Iran’s economic reliance on the strait and the requirement for approval from the Supreme National Security Council
• June 23 – Iran retaliated against US strikes by launching missiles at a US airbase in Qatar
• June 24 – US President Trump brokered a tentative ceasefire between Israel and Iran, marking a temporary halt after 12 days of direct military escalation. However, both sides accused each other of violations within hours. Israel reported Iranian missile launches and responded with limited strikes near Tehran; Trump publicly warned Israel to “Do not drop those bombs”

How has this impacted the shipping market?
The situation has introduced uncertainty along Middle Eastern trade routes, particularly through the Strait of Hormuz. Rising geopolitical risk has led to oil price volatility. Adding to the risk landscape, signal jamming has become increasingly widespread. Originally used by military forces to obscure naval movements, it has now disrupted tracking data for over 1,000 commercial vessels in the region.

Together, these factors have raised war risk premiums, increased logistical costs, and caused trade inefficiencies. These factors have also led some ship owners to avoid the region, increasing sailing distances. For ship owners, the elevated threat environment has translated into higher earnings, particularly in the Suezmax and VLCC segments.

Tankers:
Around 25% of global crude and product exports pass through the Middle East Gulf. As shipowners divert away, tightening supply and longer routes are expected to push tanker rates higher. Rising war risk premiums and shifting trade flows are likely to sustain upward pressure on tanker earnings in the near term.

Gas:
The Middle East accounts for approximately 40% of global LPG (VLGC) exports and over 20% of LNG volumes. Rising tensions have pushed up risk premiums, with some shipowners avoiding the region. This has tightened vessel supply, increased arbitrages and driven freight rates higher across both LPG and LNG markets.

PCTC:
The Middle East is primarily an import destination for car carriers and not a significant export hub. However, ongoing route disruptions and port congestion are reducing operational efficiency and tightening vessel availability. Additionally, the risk of fewer transits through the Suez Canal could create upward pressure in the PCTC segment if vessels are forced to reroute via the Cape of Good Hope. While the impact on the PCTC segment remains more limited compared to tankers and gas carriers, these conditions could support firmer rates and improved short-term profitability.

What to expect going forward
While Iran has threatened to close the Strait of Hormuz, a prolonged shutdown is seen as unlikely due to its reliance on oil exports – particularly to China. Still, any disruption would affect flows from the entire Gulf, forcing longer and more costly trade routes from other regions.

If tensions escalate further, we expect tighter supply chains, rising war risk premiums, and elevated spot rates, all of which could support stronger earnings across vessel segments in the short term. We continue to monitor the situation closely and assess its impact on asset values and performance.