Middle East tensions and OPEC+ support lifted tanker earnings in the short term

June was defined by one word: volatility. While the first half of the month saw mixed activity and seasonal softness, the tanker market rebounded strongly in the latter half due to escalating tensions between Iran and Israel. VLCC rates more than doubled week-on-week at one point, with Suezmax and Aframax segments also posting substantial gains. However, as signs of de-escalation emerged in the final days of June, earnings gradually returned to more normal levels.

Geopolitical disruptions extend sailing distances
The Iran–Israel conflict introduced widespread uncertainty, prompting risk-averse shipowners to reroute vessels away from the Middle East Gulf. This not only tightened vessel supply but also increased sailing distances and tonne-mile demand. Although a ceasefire was tentatively brokered by the US in late June, operational inefficiencies, route adjustments, and elevated risk premiums continued to support higher freight rates across segments.

Tight fundamentals reinforce market confidence
Beyond geopolitics, structural factors strengthened the tanker outlook. OPEC+ is continuing its phased reversal of production cuts, set to return to 2.2 million barrels/day between April and November. Analysts estimate this will require a demand equivalent to 70 additional Suezmaxes, boosting seaborne demand. Meanwhile, the global tanker orderbook remains at historic lows and aging fleet profiles raise expectations of increased scrapping activity.

Sanctions raise pressure on non-compliant tonnage
Western sanctions targeting the shadow fleet have further limited available tonnage, trying to push more trade back into the compliant market. The EU is debating additional caps on Russian oil exports, which could further reshape global trade flows and support higher rates through increased tonne-mile demand.