Strait of Hormuz: Risk perception drives up freight rates, but transits continue
- rorykevinproud
- Jun 26
- 2 min read
26 June 2025 Vortexa
Since the Israel-Iran conflict started in the early hours of June 13, the vulnerability of the Strait of Hormuz has become the prime focus of the tanker market. 24% of all seaborne oil imports transit via Hormuz, and 33% of all crude oil. A passage so vital to global oil trade is essentially “too big to fail”, and the likelihood of Iran closing the Strait is minimal. It would be an extremely escalatory step in the conflict and deprive Iran of the ability to export oil to China.
Hormuz transits so far within normal range
We have closely tracked transit levels through the Strait of Hormuz since June 13, which remain within normal ranges. Transits for the week ending June 22 were robust, 4% above the 2024 average and slightly higher than the weekly average for the month leading up to the attack. This strength in overall transits in the third week of June is worth highlighting, especially because crude/condensate exports from within the Middle East Gulf were very strong in H1 June, as term contracts and front-loading saw exports up almost 20% m-o-m (June 1-15). The dip we have observed in crude tanker transits specifically is a function of reduced export momentum in H2 of the month, which is a common occurrence in MEG loadings.
On an average transits-per-day basis, June figures (days 1-22) are still at a seasonal high. Although there has been volatility day-to-day in terms of transit numbers since the attack, fluctuation in daily transit figures even in normal times is common, and we would caution against drawing conclusions from daily transit changes over a short period of time. This is why we have looked at these transit patterns from a weekly perspective.
Our data shows that operators are not avoiding transiting the Strait of Hormuz, but we have observed instances of vessels waiting outside the strait and appearing to only transit when necessary to make a laycan window.
Despite the low likelihood of a Hormuz closure, even after Iran’s statements this weekend post-US strikes, the tanker market must still account for the inherent risk in voyages in and out of the Middle East Gulf via Hormuz. Consequently, spot freight rates since June 13 have shot up, with VLCC rates out of the Middle East swinging from around ytd lows on June 12 to 16-month highs as of June 23, a rise of more than 100%. This has lifted VLCC rates globally, with US Gulf-origin VLCC rates seeing a 40% rise over the same period.
Increases in War Risk Premiums, which had not risen last week despite rising freight rates, were reported on Monday (Tradewinds) to have increased post-US strikes, another sign that freight costs for charterers will continue to rise as tensions endure.
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