Nuclear talks, US tariffs & rising Middle East risk reinforce firm tanker markets

Geopolitical risk returns but fundamentals remain the core driver
US–Iran tensions moved back into focus during February, reintroducing a geopolitical risk premium to crude markets. Brent approached USD 72 per barrel, a six-month high. While physical flows remain largely unaffected, freight markets reacted more quickly, reflecting tight prompt vessel availability.

Oil market remains cautious for now
Recent crude gains have primarily been driven by geopolitical risk premium rather than supply loss. Most analysts still view a full closure of the Strait of Hormuz as low probability, though even limited disruption could materially tighten tanker balances. During the month, Iran temporarily restricted activity in parts of the Strait of Hormuz during live-fire drills, widely interpreted as a warning signal around a corridor that carries roughly 20 percent of global oil flows.

Structural balance continues to favour owners
Beyond headlines, crude tankers remain supported by a constructive supply–demand balance. Near-term fleet growth is modest, while high newbuilding costs and limited yard capacity continue to restrain supply. Seaborne volumes also remain firm, supported by ongoing trade dislocation and long-haul flows. Overall, the market continues to exhibit tightening mid-cycle characteristics.

Crude flows continue to pivot toward Asia
February reinforced the eastward shift in global oil trade. Russian Urals flows continue to move toward China, with roughly 6.3 to 6.9 million barrels transferred via Red Sea ship-to-ship transfers since December. Chinese imports of Russian crude averaged about 2.09 million barrels per day in early February, more than offsetting lower Indian intake. The trend is mirrored elsewhere, with Canadian exports to China more than quadrupling last year. With China and India remaining the largest marginal consumers of seaborne crude in 2026, the Asia pull continues to support tonne-mile demand.

Citrini report triggers cross-asset volatility
The Citrini Research report released on 22 February had broader market impacts. The S&P 500 fell about 1 percent in less than a day, while technology and software equities experienced sharp drawdowns following the report’s AI risk assessment. Bonds and gold moved higher. Crude prices remained stable, indicating the commodity’s relative resilience during macro-driven market stress. The episode nonetheless highlights a macro backdrop that could amplify freight volatility during geopolitical stress.

OPEC+ policy adds a balancing force
OPEC+ is reportedly considering resuming production increases after pausing hikes through Q1 2026. Additional supply could cap crude prices but would likely support tanker demand through higher seaborne volumes.

Investor implications
February reinforced a constructive outlook for crude tankers. Given firm balances, restrained fleet growth, and elevated geopolitical sensitivity, freight markets remain positively skewed. Current conditions suggest continued headline sensitivity in the months ahead.