This week has been positive across EMF’s key shipping segments, driven by the unfortunate heightened tensions in the Middle East. The ongoing conflict between Iran and Israel is now impacting the broader shipping industry, with the most pronounced effects seen in the tanker and gas markets — both of which EMF is directly exposed to. While a peace agreement appears unlikely in the short term, it is important to acknowledge that the market impact could ultimately prove to be temporary. 

Tanker market benefits from Middle East Gulf (MEG) tensions
Tanker earnings have surged, led by the VLCC segment, which has more than doubled week-on-week, according to Fearnleys. Suezmax and Aframax rates have also recorded increased earnings. The primary driver behind these gains is rising geopolitical risk in the MEG, which is pushing shipowners to seek cargoes in alternative regions — thereby extending sailing distances and tightening vessel availability. 

There is also growing concern in the market about a potential closure of the Strait of Hormuz. However, both EMF and industry experts consider this scenario highly unlikely, as such a disruption would severely impact the global energy supply chain and impact Iran as much as their enemies.
Read more about the Iran-Israel conflict here. 

LPG market also sees rise in rates
The LPG market has also reacted to the instability in the region. A substantial share of global gas exports originates from the Middle East and shifting trade patterns are impacting freight rates. Notably, the VLGC segment is benefiting from stronger arbitrage opportunities on US-to-Asia routes, driving more tonnage westbound. The benchmark Houston–Chiba route is now trading at spot rate of USD 55,000/day, up nearly 10% week-on-week. 

Conflict indirectly drives PCTC segment towards longer routes
The PCTC (car carrier) segment is indirectly affected by the reduced navigational efficiency in the Suez Canal due to regional unrest. In the short term, the conflict has led more vessels to re-route south of the African continent via the Cape of Good Hope (COGH). This increases voyage durations, reduces tonnage availability, and contributes to a tighter market balance.