Hormuz crisis slashes VLCC volumes by 36% but voyages are longer
THE very large crude carrier market has always been about tonne-miles, but never have the two variables in this equation swung so violently at the same time.
The “tonnes” carried aboard VLCCs are down sharply since the effective closure of the Strait of Hormuz. But the “miles” are higher, as more Atlantic basin crude is loading for delivery to Asia.
Shifting flows on VLCCs
Global seaborne crude and condensate exports averaged 36.3m barrels per day in the eight weeks ending May 3, according to data from Vortexa. That is down 6.8m bpd or 16% versus the pre-war average, from January 2025-February 2026.
VLCCs, due to their high exposure to the Middle East Gulf, are down more than other crude tanker segments.
Global crude exports on VLCCs averaged 14.4m bpd over the past eight weeks, down 8.1m bpd or 36% versus prewar levels — the equivalent of four VLCC loads per day — while crude on non-VLCCs averaged 21.9m bpd, up 1.3m bpd or 6%.
Consequently, the VLCC share of seaborne crude exports has fallen to 40% amid the Hormuz crisis, versus 52% in January 2025-February 2026.
The counterbalances to these negatives: VLCCs trapped inside the strait and longer voyage distances have reduced effective capacity.
Sparta Commodities said that there are 58 VLCCs inside the strait; DHT chief executive Svein Moxnes Harfjeld put the tally at 57 during a conference call on Wednesday.
“Approximately 10% of the VLCC fleet is tied up, either waiting to exit the gulf or waiting to load from Saudi Arabia’s western export facility [Yanbu],” Harfjeld said.
Vortexa data shows the voyage distance upside.
VLCC export volumes in the Pacific basin, which includes the MEG, fell to 8.4m bpd during the past eight weeks, down 8.1m bpd or 49% versus the average in January 2025-February 2026.
Atlantic VLCC loadings averaged 6m bpd over the past two months, in line with prewar levels, although the trend in recent weeks is more positive.
In the week ending April 26, Atlantic exports on VLCCs average 8.1m bpd, courtesy of the release of US strategic petroleum reserves.
The tonne-mile driver for VLCCs is the cross-basin trade around the Cape of Good Hope from the Atlantic to the Pacific. The distance between Galveston, Texas and Ningbo, China is 2.6 times longer than the distance between Ras Tanura, Saudi Arabia and Ningbo.
Atlantic-to-Pacific voyages accounted for 35% of crude export volumes on VLCCs in the past eight weeks, versus just 22% in January 2025-February 2026, according to Vortexa data.
Spot rates stabilise at six-figure mark
The net result of these various positive and negatives is that VLCC rates have stabilised at around $100,000 per day, double spot rates at this time last year.
The Baltic Exchange’s US Gulf-China index was at $91,731 per day on Wednesday. It has fluctuated around the six-figure mark for the past three weeks.
The Baltic’s West Africa-China index was at $99,407 per day on Wednesday. It has been fairly steady for the past two weeks.
Outside of the Atlantic, the main remaining VLCC loading ports (excluding storage re-exports) are Yanbu in Saudi Arabia and Fujairah in the UAE.
According to Harfjeld, “There are some academic risks in these areas, but people have become more comfortable with them, and those freights are now closing in and are more aligned with what the Atlantic trades are offering. As of now, there’s not a big delta. I see more nomalisation in pricing on those two routes compared to the rest of the markets.”
There is concern that the balance will tip towards charterers and that VLCC rates, in general, could fall further.
Fearnleys said on Wednesday: “Lack of volume is now starting to bite in earnest, and with that, rates continue to be under pressure. VLCC daily earnings still hover close to $100,000 per day, but there’s no denying the direction of travel short-term.”
According to Sparta, “Atlantic basin tonnage is swamping record US export demand. The US Gulf tonnage list has lengthened across all vessel classes. The tonnage overhang is overriding the demand signal. If the list lengthens further, [tanker indexes] reprice lower even with supportive crude economics.”
Long road to recovery for MEG
The news cycle continues to be dominated by talk of a potential peace agreement between the US and Iran, followed by disappointment and the next round of upbeat reports.
The reality for shipping markets is that the strait remains effectively closed, as it has for the past 71 days. The industry consensus is that there will not be a quick recovery.
“As the blockades persist, there’s no material change for the tanker market, nor is there likely to be for some time,” said Fearnleys.
“Hormuz still closed, peace framework still paper,” commented Sparta.
According to Harfjeld, “The news flow over these last few weeks has been rather volatile, with good news and bad news every second day. We cannot react to good news one day and assume we can enter on the second day.
“The credibility of a solution has to be in place and I think that will take a bit longer than a few days. There has to be a high level of credibility for a solution to the conflict, where we expect that agreements will last.
“We have, on average, 25 employees on board each ship, and to expose them to trades like this [before a solution] is not something we are willing to discuss. It is a non-starter for us.
“The key action we need to see now is that all of these ships that are trapped inside the gulf exit safely, and that will take a while. This has to unwind to demonstrate that the passage of the strait is safe.”
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