TechFlow News, June 6: According to the Financial Times, global oil shipping achieved a record first-quarter profit of $36 billion, driven by the war that erupted in February and Iran’s blockade of the Strait of Hormuz. However, as the U.S. and Iran negotiate the Strait’s reopening, tanker owners now face the risk of plummeting freight rates and market collapse.
The blockade stranded over 160 tankers in the Persian Gulf, severely constraining capacity and pushing daily charter rates for very large crude carriers (VLCCs) to a peak of $386,685. With expectations rising that the Strait will soon reopen, daily rates have recently fallen to between $55,000 and $95,000—still above the historical average of $30,000–$40,000.
Alexander Saverys, CEO of major shipping company CMB Tech, warned that the industry has blindly poured massive profits into new vessel orders; VLCC order volumes this year have already hit an all-time high. Once the Strait resumes full operations and pent-up capacity is released, an oversupply of vessels could trigger a cyclical, devastating crash across the shipping sector. Currently, Greek shipowners dominate global tanker assets, operating a fleet valued at $66.4 billion.
