THERE was a brief flurry of interest in fixing tankers from inside the Strait of Hormuz after the US-Iran ceasefire on April 8. That interest has evaporated.

Now that the US is imposing a blockade, the tanker market calculus has changed.

The US is targeting Iranian cargoes, but is reserving the right to board any vessel moving in either direction. There is uncertainty on how the US will treat tankers with non-Iranian cargo allowed to exit by Iran, given US President Donald Trump’s previous command to “interdict every vessel that has paid a toll”.

“A few high-rate spot VLCC [very large crude carrier] and suezmax fixtures were reported last week, only to be cancelled shortly afterwards,” said Clarkson Securities analyst Frode Mørkedal on Monday.

The US blockade “brings more uncertainty to the situation”, said Mørkedal. “Fears of being trapped inside the Hormuz are keeping shipowners away from the region.”

According to BRS, “Any optimism that last week’s ceasefire agreement would rapidly lead to an increase in traffic through the strait was misplaced. Indeed, a return to normality in the Middle East arguably now appears more distant than it did one week ago.

“It is anticipated that there will be little or no commercial traffic in the strait for the foreseeable future,” said BRS.

Downside threats: Atlantic migration, demand destruction

Many tankers had already opted to ballast to the Atlantic basin, but many others were waiting in the Pacific, hoping to tap a re-emergent Middle East Gulf market. With a reopening no longer imminent, owners have more incentive to ballast westward.

A longer strait closure poses two negatives for tanker rates: it increases the likelihood of larger-scale demand destruction, and it increases competition for cargoes in the Atlantic.

“We are now approaching a critical point, in our view, with demand destruction starting to spread across the complex,” said Pareto Securities.

According to BRS, “Oil demand destruction is unequivocally starting to rear its ugly head, especially in developing Asia. Given recent fuel protests across Europe, higher prices are also starting to hit demand there.”

“The longer Hormuz remains closed, the more demand destruction will be required to balance the global market,” said BRS, warning that “this could significantly curb global crude and product tanker demand”.

Crude and product indexes continue to diverge

According to data from Vortexa, Pacific basin seaborne crude and condensate exports in the four weeks to April 5 were down 9.2m barrels per day versus the full-year 2025 average.

Atlantic basin seaborne crude exports in the same period were up only 624,000 bpd compared to the 2025 average, leaving a deficit of 8.6m bpd.

Pacific basin seaborne exports of diesel, gasoline, jet fuel and naphtha fell by 3.3m bpd in the four weeks to April 5 versus the full-year 2025 average. Atlantic basin exports increased 1.1m bpd, leaving a deficit of 2.2m bpd. 

The migration of tanker tonnage to the Atlantic affected VLCC rates first. Suezmaxes and aframaxes began to decline thereafter, while product tanker rates are holding firm.

“For the moment, more crude ballasters are arriving than clean and consequently this is starting to drive a divergence between crude and clean tanker rates in the west,” said BRS.

The Baltic Exchange’s US Gulf-China VLCC index came in at $113,061 per day on Monday, with the West Africa-China VLCC index at $125,249 per day.

These indexes were more than twice as high in early March, but have remained fairly rangebound over the past four weeks. “Sentiment remains under some pressure,” said BRS.

Suezmaxes and aframaxes are outperforming VLCCs in the Atlantic. They reached their peak in late March and are still historically high.

The Black Sea-Mediterranean suezmax index was at $298,299 per day on Monday, versus a high of $344,198 per day on March 26. The West Africa-North Europe suezmax index was at $135,587 per day, versus a high of $215,297 per day on March 26.

Three aframax indexes suffered steep drops over the weekend, albeit from very high rates.

The Mexico east coast-US Gulf aframax index plummeted by $75,878 per day on Monday versus Friday, a decline of 25% to $229,476 per day.

The Colombia east coast-US Gulf index sank 24% or $64,392 per day to $203,937 per day on Monday.

The US Gulf-North Europe aframax index plunged by 28% over the weekend, coming in at $125,355 per day on Monday, down $48,317 per day versus Friday.

Commenting on aframax rates in the Mediterranean, BRS said, “Rates continued to tumble across the board [last week]. Market sentiment remains soft and further corrections are expected this week.”

In contrast, product tanker rates continue to climb, reaching new all-time highs.

The LR2 Mediterranean-Asia rate rose to $122,267 per day on Monday, the highest since the index debuted in 2018.

The US Gulf-Europe rate for medium range tankers was at $92,924 per day, the highest since the index began in 2012.

The US Gulf-Brazil rate for MRs rose to $99,238 per day on Monday, the highest since the index started in 2020.

“Product tanker rates appear to be holding up the best,” said Pareto. “But unless the situation changes, there will at some point be a heavy freight correction.”