CRUDE tankers continue their epic bull run, with very large crude carriers now earning almost $200,000 per day in the Atlantic basin.

Product tankers are a different story. Product tanker spot rates, particularly for medium-range vessels, are back within the historical range, despite unprecedented disruptions to global supply.

Market changes may lie ahead. The cross-Hormuz shuttle trade, already a major factor for VLCCs, could become more important for long-range product tankers going forward.

Medium-range product tankers

Jacob Meldgaard, chief executive officer of Torm, was asked about the relatively normalcy of MR rates during a conference call on Wednesday.

“Being in this day to day, we are making the same observation. There are a lot of elements, but I think that every day, we are depleting inventory globally. The crude and products being moved are obviously at a lower volume than what they were before [the Hormuz crisis],” he said.

Crude shipped to refineries covers domestic requirements but less is available to cover products exports to take advantage of global arbitrage trades in diesel, gasoline and jet fuel, a market often handled by MR product tankers.

“As long as we’re in this sort of environment where there’s just enough oil, the spillover trade from refinery sites is less than what you would have with a normal amount of crude going to the market,” said Meldgaard.

“The spillover for the MRs to pick up is simply less. Now, it’s more base loads for MRs. You would need to have more volume of crude that exceeds daily consumption before you see the arbitrage trades for refineries start to reopen.

“This means that crude is definitely moving to a higher degree [than products],” he explained.

Ergo, VLCC rates are booming, whereas MR product tanker rates are profitable but not particularly unusual.

Listed product tanker owners are reporting all-time-high net income for 2Q26, in part due to a spike in MR spot rates in March and April, but those financial results are backward-looking. 

The MR rate spike was a temporary upsurge at the beginning of the Hormuz crisis, largely concentrated in US-origin trades and driven by the panicked scramble of Asian countries to purchase clean products from the US after the Strait of Hormuz closed.

That initial panic led to a highly unusual volume of cross-basin flows on MRs from the Atlantic to the Pacific.

According to data from Vortexa, clean export volumes on MRs moving from the Atlantic to the Pacific basin accounted for 16.9% of global exports on MRs in March and April, sharply higher than the average of 9.1% in March-April 2025.

In May-August, Atlantic-to-Pacific basin MR export volumes accounted for 10.2% of global MR volumes, according to Vortexa data, on par with the 9.6% share during the same months last year.

Long-range product tankers

Like MRs, LR1 and LR2 product tankers also saw a panic-induced jump in Atlantic-to-Pacific flows in March-April.

But the Middle East Gulf is a much more important loading market for LRs than MRs, and the effective closure of the Strait of Hormuz halted MEG-Europe LR1 and LR2 flows, lowering Pacific-to-Atlantic volumes just as energy security concerns in Asia also reduced product exports to the Atlantic.

Consequently, higher Atlantic-to-Pacific volumes on LR1s and LR2s during March-April were offset by lower Pacific-to-Atlantic flows.

According to Vortexa data, total LR1 and LR2 cross-basin volumes accounted for 31.5% of export volumes in March and April, in line with the 30.8% average the year before.

In May-August, the cross-basin share of LR1 and LR2 export volumes has averaged 28.9%, down from 31.7% in the same period last year.

One way the Hormuz crisis did help the long-range product tanker market was that it pushed aframax earnings above LR2 earnings, causing a further migration of coated tankers from the LR2 trade to the aframax trade.

“A record number of LR2 vessels have shifted from clean product transportation into crude transportation, a process known in the industry as ‘dirty-up’,” said Meldgaard.

“By the end of July, approximately 70 fewer LR2s were available for clean petroleum products transportation than at the start of the year. As a result, effective CPP capacity overall has declined by roughly 5% despite nominal fleet growth of a similar magnitude. In other words, headline fleet growth suggests more supply. The reality is that the fleet available to transport CPP has become tighter.”

That has supported LR2 spot rates.

During its quarterly presentation, Torm cited an LR2 benchmark based on a Clarksons basket of rates from Yanbu to Rotterdam, and from Ras Tanura or Fujairah to Chiba, that is now around $70,000 per day versus around $50,000 per day pre-Hormuz crisis.

Hormuz shuttle service effect

A further expansion of the Hormuz shuttle tanker-Gulf of Oman STS trade beyond VLCCs to LR2s could further boost LR2 demand and rates, which are already being supported to some extent by this flow.

“The UAE and others are increasingly using dedicated shuttle operations and STS transfers to sustain exports. Today, more than 30 VLCCs and around 14 LR2s are engaged in these activities,” said Meldgaard.

According to Braemar, “Refined products have been exported out of the MEG in smaller volumes than crude, averaging 918,000 barrels per day since the [US-Iran peace] MoU collapsed, with 333,000 bpd exported via STS in the Gulf of Oman.

“Roughly 53% (180,000 bpd) of this STS volume is naphtha, 19% (64,000 bpd) is diesel, 15% jet (50,000 bpd) and the balance is fuel oil. An LR2 that shuttled jet fuel and diesel out of the Gulf and an LR1 that shuttled diesel was both named-on Iran’s blacklist,” Braemar noted.

Meldgaard said, “We just need more of the STS transfers to occur, and our instinct is that there is a movement from the national states in the Middle East to contemplate having this oil bridge. I think that it is maxed out now, more or less, on the capacity they have, and they’re looking to increase that further as a strategic response.

“I think they are saying, ‘We would like to control our own destiny so we will ante up on this oil bridge’.”

When Torm announced 1Q26 results in May, it estimated that around 1m bpd of crude and product combined was moving via the Hormuz shuttle service. On Wednesday, it estimated that around 6m bpd of crude and 1m bpd of CPP was moving on the shuttle trade.

“That is significantly more than in May but of course there’s a long way to go to get to 20m bpd [the aggregate volume before the crisis],” he said.

Theoretically, if MEG countries were to normalise their CPP flows using the shuttle service, Meldgaard estimated that they would need to increase from 15 LR2s currently to “closer to 50, which would be beneficial for LR2s”.

That said, there are two caveats to this scenario: one that Meldgaard mentioned and one that he did not.

He did point out that the priority for MEG producers is crude. When asked whether Torm saw MEG state companies buying product tankers to secure more controlled capacity, as they are with VLCCs and suezmaxes, he responded: “We’re not seeing that yet on the clean side. So far, it has been more of a crude story.

“If you’re an oil producer, I think it is most important right now — the first dilemma you would like to solve — is: what do I do with my crude? So, you clearly engage with VLCCs to have the shuttle service.

“The second step you would evaluate is: Can we resume our operations on the refinery side, and how do we solve the logistics problems around that?”

Another caveat, which Meldgaard did not address, is that the Islamic Revolutionary Guards Corp may ultimately prove more aggressive than it is currently. The risk is that the shuttle flow through the existing Omani route may not be sustainable or expandable.