Hormuz Strait Navigation Normalization Advances, VLCC Freight Rates Plunge 44% Within a Week to $287,000
Miles Bennett
The cost of shipping 2 million barrels from Saudi Arabia to China plunged 44% to $287,000 this week as Persian Gulf exports recovered to 75% of pre-conflict levels — supply is flooding back faster than the market can absorb it, pushing Brent below $72.
What just happened to shipping rates?
Baltic Exchange data shows the Saudi-to-China VLCC rate fell to $287,000 on Friday, down 44% from over $514,000 on Tuesday.
This means → shipowners who risked the strait before the ceasefire briefly earned up to $47,000/day in war premiums. That window is now essentially closed.
In plain terms = more ships came back, capacity is no longer scarce, and the "danger bonus" has vanished.
How much traffic is flowing through Hormuz?
After the interim U.S.-Iran peace deal, 48 ships transited the strait on Friday alone — though this figure excludes vessels with transponders switched off.
Arrow Shipping data shows 75 million barrels of crude have flowed out of the Persian Gulf by tanker since the deal was signed — roughly 75% of pre-conflict export volumes.
Loading operations have resumed at Saudi Arabia's Ras Tanura terminal, the Gulf's largest export port. This signals that producer states are accelerating shipments.
Why are oil prices falling alongside freight?
Brent crude slipped below $72 per barrel on Friday; WTI traded around $69 — both near pre-conflict levels.
HSBC analyst Kim Fustier said the reopening has created a "near-term supply glut" — Gulf exports are rebounding faster than the market can digest them.
This means → demand hasn't weakened; the issue is too much oil arriving too quickly for the market to absorb.
Will prices keep falling?
Fustier flagged the next inflection point: it may come after two things happen — ① the backlog of stranded cargoes clears, and ② countries stop releasing strategic petroleum reserves (SPR — government emergency oil stockpiles) when those programs end in July. After that, Brent could drift back toward $80.
She stressed that "China remains the key marginal buyer" — Chinese demand will be decisive for the next leg of the oil-price story.
CIBC trader Rebecca Babin added: the bearish narrative still rests on continued improvement in Hormuz traffic flow. "Even though transit numbers dipped after a vessel was attacked yesterday, passage was never fully shut down."
Could freight rates spike again?
Rates have dropped sharply but remain in profitable territory — shipowners are still making money, just far less than a week ago.
The core variable: whether the strait can sustain stable transit before mine-clearing operations are complete. Any fresh disruption would tighten capacity instantly.
In plain terms = freight rates track one question — "is the route safe?" Right now the answer is tentatively yes, so rates are falling. But until the mines are cleared, the risk hasn't disappeared.
Content is for reference only, not financial advice.