THE tanker market’s response to disruption in the Middle East Gulf and Red Sea is no longer a short-term adjustment to geopolitical instability. It is becoming a structural redistribution of ships, ownership and risk.

National oil companies across the Middle East are increasingly concluding that transport capacity is too important to leave entirely to the charter market. The result is a buying spree that is reshaping tanker ownership and inflating asset values, particularly for the older vessels most willing to trade in high-risk waters.

Abu Dhabi’s Adnoc has already spent more than $1.4bn acquiring tanker tonnage, while Iraq’s state marketer SOMO is quickly moving in the same direction. Some sale-and-purchase negotiations are reportedly collapsing as sellers demand what market participants describe as “crazy numbers”. Yet buyers continue to emerge because the economics remain compelling.

The calculation is straightforward. Freight earnings for voyages associated with the MEG risk trade have risen to levels that can repay the cost of an inflated tanker purchase in only a handful of voyages. For companies willing to accept the security risks, ships have become strategic assets capable of guaranteeing export flows, controlling logistics costs and capturing extraordinary earnings.

That strategic value reflects a market increasingly divided by risk tolerance. While some owners remain willing to trade through Hormuz, Fujairah and the Bab el Mandeb, others have imposed ever tighter restrictions on where their vessels can operate. Charterers describe a fragmented landscape in which many owners are willing to consider only a narrow range of routes, with some seeing US Gulf-to-China voyages as among the few remaining trades offering sufficient comfort.

The consequence is a transfer of assets from risk-averse owners to risk-accepting state-backed buyers. Middle East Gulf national oil companies are effectively purchasing capacity from owners unwilling to operate in the region, creating a market-driven reallocation of transportation assets towards those most prepared to shoulder the risks.

The effects extend beyond the MEG. Owners selling older ships at substantial premiums are reinvesting those proceeds elsewhere, adding further momentum to tanker asset inflation across other sectors.

Meanwhile, oil exports continue to flow through increasingly sophisticated relay systems accepting that drone strikes and casualties are now part of the calculations. Shuttle tankers carry crude through the most dangerous waters before transferring cargo ship-to-ship off Fujairah, Sohar or Shinas for onward delivery to Asia. The arrangement reduces exposure while preserving trade flows, but it also concentrates risk among a relatively small pool of vessels and crews willing to undertake the most hazardous leg of the journey.

For now, the system is functioning. Oil is reaching market and freight networks remain intact. The more important question is whether shipowners’ reluctance to return to these routes proves temporary or enduring. If risk aversion persists, national oil companies may continue accumulating tonnage, further cementing a tanker market where ownership increasingly reflects geopolitical risk appetite rather than purely commercial calculation.

Richard Meade
Editor-in-chief, Lloyd’s List

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