Record-breaking tanker rates pile pressure on already high fuel prices
Lead — As crude tanker rates reach unprecedented levels due to geopolitical strife in the Middle East, particularly the ongoing Iran conflict, fuel prices face additional upward pressure. Per the full note from ing-think, this surge is compounded by diminished tanker capacity and elevated insurance costs, signaling a tightening market that traders need to navigate carefully. With crude deliveries from alternative sources, such as the U.S., increasing, the landscape for oil markets is rapidly evolving. The desk anticipates that traders should closely monitor the implications of these dynamics on broader FX flows, especially relating to energy-exporting currencies.
What the desk is arguing
The desk believes that soaring tanker rates amidst geopolitical tensions will exert significant pressure on global fuel prices, potentially influencing currency valuations linked to energy exports. Per the full note from ing-think, freight rates have hit all-time highs largely due to capacity issues and heightened operational risks, as tankers navigate conflict zones.
Evidence from the note indicates that crude tanker rates have been propelled higher by demand shifts and restructured supply chains. The average crude tanker rate surged to historic levels, indicating how the prolonged conflict is reshaping operational logistics in the oil market. With tanker operations facing military protection requirements and elevated insurance premiums, traders must adjust their strategies accordingly.
Where it sits in our coverage
Our consensus target for USD/BRL currently sits at 1.075, with a range of 1.04 to 1.12 across different firms.
This perspective aligns with jpmorgan, which projects strength in energy-exporting currencies influenced by high fuel prices. However, it diverges from bofa's caution of a potential retreat in these currencies should global demand temper due to elevated prices dampening consumption.
How other firms see it
Firms like jpmorgan and citi view the rising tanker rates as a bullish signal for energy export currencies, suggesting that sustained high prices could lead to favorable terms of trade for oil-rich nations. Conversely, bofa holds a more bearish stance, indicating that the high prices could ultimately hinder global growth and demand for oil, leading to a pullback.
Watch USD/CAD and AUD/USD for potential spillover effects, particularly as movements in crude oil prices are expected to correlate with central bank policies in these regions.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Crude tanker rates are at historic highs due to geopolitical tensions.
- 02High operating costs and capacity constraints are pressuring global fuel prices.
- 03Energy-exporting currencies may benefit, but risks remain due to possible demand destruction.
- 04Monitoring USD/CAD and AUD/USD will be crucial as oil price dynamics evolve.
Market implications
Traders should be vigilant regarding movements in energy-linked currencies, especially USD/CAD, as shifts in crude prices could directly influence the Canadian dollar's strength. Additionally, the ongoing geopolitical instability may lead to increased volatility in these pairs, requiring close monitoring of market developments.
Risks to this view
A significant easing of geopolitical tensions in the Middle East could lead to a reduction in tanker rates and an overall decline in fuel prices, which would negatively impact energy-exporting currencies. Furthermore, if global demand for crude oil proves more resilient than anticipated, it could counteract the effects of elevated tanker rates on prices and currency values.
Articles Record-breaking tanker rates pile pressure on already high fuel prices Published 10:00 Transport & Logistics Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Crude tanker rates have hit all-time highs amid the prolonged Iran war and Strait of Hormuz disruption. Restructured oil flows and a rush for capacity to handle oil transport operating under military protection have driven rates sharply higher, adding further pressure to fuel prices alongside strong refinery margins Rico Luman Record-breaking tanker rates along with operating in war zones and elevated insurance premiums are all contributing to high fuel prices Tanker shipping thrives in risky waters amid a continued capacity squeeze Oil tanker markets sit at the centre of geopolitical turmoil, and this year that has translated into record-breaking freight rates as the conflict in the Middle East drags on. Tankers have been caught up in sanctions regimes and repeatedly targeted in key shipping lanes, including the Strait of Hormuz, Bab al-Mandeb and the Gulf of Aden.
At the same time, demand for tanker capacity has surged as traders seek alternative routes and sources of supply, including increased shipments from the US. The opening of a protected corridor through Omani waters has enabled additional crude exports and vessel movements, but has also placed further strain on an already stretched market. Shuttle services now operate around the Strait of Hormuz, with under the radar activity and ship-to-ship transfers taking place outside the chokepoint.
The conflict and tanker seizures in the Persian Gulf erupted at a time when the market was already facing a shortage of capacity. New deliveries of crude carriers slowed sharply following a record-low order book in 2022-23, while an increasing number of older and smaller vessels joined Russia's shadow fleet, further reducing the pool of compliant tankers available to the wider market. Crude tanker rates have soared, pushing up transport costs Average global tanker earnings in $ per day Source: Clarksons, ING Research "> Source: Clarksons, ING Research Crude tanker earnings rose tenfold on rush for capacity The capacity squeeze, combined with operating in risky war zones and facing highly elevated insurance premiums, has sent tanker rates soaring.
We have seen previous surges in this volatile market, such as in 2022 after sanctions were placed on Russia, but this spike is beyond levels ever seen before. Average global crude vessel earnings exceeded an unprecedented level of $500,000 per day, 10 times the 2025 average, in early October. For Suezmax tankers and very large crude carriers (VLCCs, with a maximum capacity of 2m barrels) alone, rates surged even beyond that.
Crude shipments from Ras Tanura in Saudi Arabia to Rotterdam made up about $2/bbl in 2025; in September, this surged beyond $35. Combined with high refinery margins (the current crack spread of diesel in Europe is about 2.5 times the 2025 average), this could add over $0.50 to the base price of a litre of diesel at the gas station. Earnings of product tankers have also tripled compared to the 2025 average.
Nevertheless, these have responded much more moderately. This is mainly because of the key importance of the Middle East region for crude oil. And when it comes to the supertankers, the VLCCs, these are designated to transport crude and traditionally are intensively deployed on the Middle East trade routes.
Orders for new crude tankers have surged on a bullish market Order books for new crude and product tankers in % of the total fleet Source: Clarksons, ING Research "> Source: Clarksons, ING Research Crude tanker orders pick up after a prolonged downturn Tanker markets are cyclical by nature, and there’s a clear connection with freight rates. Over the pandemic years of 2020-21, tanker earnings hit lows due to lower oil consumption and shipments. This resulted in an order book of just 4% of global crude carrier capacity, the lowest on record since the 1990s.
With the recovery of oil demand and tanker rates in 2022 and 2023, order intake began to rebound. This year, in particular, order books have doubled from 14% to 28%. Although the average age of the crude fleet has also reached a multi-decade high of over 13 years and more scrapping can be expected, we can also expect more supply pressure.
But many of these vessels will only be delivered in 2028-29, likely after the current boom ends. It’s all about geopolitics and how the Middle East conflict evolves, but tanker markets could still see a solid 2027. Tanker Shipping Oil prices Oil demand Hormuz Fuel Diesel Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives.
The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Author Rico Luman Senior Sector Economist, Transport and Logistics Rico Luman is a senior sector economist with a focus on transport, logistics and the automotive industry. He also looks at ports economics and mobility in general.
Formerly he worked as a credit… In this article Tanker shipping thrives in risky waters amid a continued capacity squeeze Crude tanker earnings rose tenfold on rush for capacity Crude tanker orders pick up after a prolonged downturn
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