Freight rates for Very Large Crude Carriers (VLCC) have sharply increased due to the closure of the Strait of Hormuz and the war in the Middle East. In this context, the average freight rate in the first week of October reached $665,000 per day, which is nearly a 10 percent increase compared to the previous week and represents a new record. This rate has also increased by 72 percent compared to the first week of March, immediately after the start of the war between the U.S. and Iran.
Increase in Rates and Its Impact on the Shipping Industry
The one-year freight rate for VLCCs has risen to over $210,000 per day, while before the war this rate was around $130,000 per day. Due to armed conflicts in the Middle East, oil tankers have become severely scarce.
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According to a report published on the second of this month, the volume of oil passing through the Strait of Hormuz has averaged 12 million barrels per day, which represents 80 percent of pre-war levels. However, oil transportation from the Gulf region to transshipment points and ship-to-ship (STS) transfers in the Gulf of Oman has increased, and voyages have become longer due to ships rerouting from Cape Town in South Africa, resulting in a significant reduction in the turnaround time of vessels.
Future Outlook for the Shipbuilding Industry and the Need to Replace Aging Ships
The increase in rates has led to improved financial conditions for VLCC operators. According to published information, DHT Holdings' adjusted net income in the second quarter of this year reached $255 million, a 175 percent increase compared to the same period last year. This situation has led to expectations that new orders for replacing aging ships will increase.
The number of VLCCs globally is estimated to be around 850 to 910. According to analysts, the demand for replacing VLCCs reaches about 130 ships. Meanwhile, 42.6 percent of the VLCC fleet consists of ships 15 years old and older, which are recognized as replacement targets.
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