VLCC Rates Shatter All-Time Records as Hormuz Blockade Splits Freight Markets in Two

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IC Shipbrokers reported Thursday that global freight markets are moving in sharply divergent directions: the dry bulk sector softening from its first-quarter peak while the tanker market registers historically unprecedented rate levels driven by the closure of the Strait of Hormuz following US and Israeli strikes on Iran.

The Baltic Dry Index stood at 2,037 points as of March 26, holding above mid-2025 levels but retreating from the multi-year highs recorded in February. Tanker markets, by contrast, are experiencing a dislocation with few modern parallels, as the world’s most critical oil transit chokepoint effectively ceased normal operations on February 28.

The benchmark freight rate for Very Large Crude Carriers on the benchmark Middle East to China route hit an all-time high of $423,736 per day, a surge of more than 94 percent from the prior Friday’s close. Over 150 tankers anchored outside the strait rather than attempt a transit, with just 21 vessels completing the passage since hostilities began, compared with more than 100 ships daily in the period before the conflict.

War risk insurance for Gulf transits was cancelled with effect from March 5. Vessels that do attempt passage now operate without standard Protection and Indemnity cover. Operators redirecting cargoes around Africa’s Cape of Good Hope are adding between 3,500 and 4,000 nautical miles per voyage, with transit times extending by 10 to 14 days and fuel costs rising proportionally. UNCTAD warned that rising tanker rates and war risk premiums are feeding into broader supply chain costs, with approximately one third of global seaborne fertilizer trade also passing through the strait, raising access concerns for some of the world’s most import-dependent economies.

Crude oil prices reflect the disruption. WTI was trading at $90.26 per barrel on Thursday, while Brent crude briefly spiked near $120 per barrel in the immediate aftermath of the strikes before easing to approximately $92, still roughly $20 above its level at the start of the month.

The dry bulk picture is one of gradual deceleration rather than distress. IC Shipbrokers described Thursday’s session as “a true copy of yesterday” across all segments.

The Baltic Capesize Index stood at 2,626 points, with average daily earnings of $20,318. Capesize activity showed marginal improvement, with rates edging upward across most areas and directions. The forward earnings curve for capesize vessels remains elevated for the remainder of 2026, and the earnings gap between capesize and panamax tonnage is widely expected to widen through the year.

Panamax activity was slower. The Baltic Panamax Index closed at 1,612 points, with average daily income of $14,504, as rates slipped modestly across most load regions. The Supramax segment registered the Baltic Supramax Index at 1,035 points and earnings of $13,082 per day, while the Handysize segment closed at 601 points on the Baltic Handysize Index with earnings of $10,810, both with marginally softer rates across most directions.

Structural supply pressure remains a concern for the dry bulk outlook. Net fleet growth in 2026 is projected to reach its highest level in 14 years, as a more positive earnings environment has curtailed scrapping activity and reduced demolition volumes.

The European coaster market saw further slowing activity on Thursday, with rates in the Baltic Sea and on the Continent easing modestly. The Black Sea and Mediterranean segments provided a partial counterpoint, with both reporting minor rate increases.

The regional picture is being shaped partly by the secondary effects of the Hormuz crisis. The resumption of Houthi attacks on Red Sea shipping, announced on February 28, has pushed additional vessel traffic onto the Cape of Good Hope routing, extending voyage times on Europe-bound trades from Asia and tightening available tonnage on Atlantic basin routes. Grain exports from the Atlantic basin have provided consistent employment for Panamax and smaller vessels, offering some support to Baltic and continental freight levels.

Container freight rates, which had been declining through early 2026, are now expected to reverse as the rerouting effect compounds on both tanker and box ship markets.

The divergence between a cooling dry bulk market and a tanker sector at historic extremes underscores how a single geopolitical event can fracture what was, until late February, a broadly stable freight environment.