Hormuz paralysis rewrites shipping economics

The Clarksea Index – Clarksons Research’s weighted barometer covering all commercial shipping segments  – on Friday hit an all-time high of $53,3190 a day exceeding $50,000 a day for only the third time. Both previous instances were at the height of the 2007/08 boom, and Friday’s stellar figure compares to a robust average across 2025 of $26,836 per day.      “Alongside huge operational risk and stress, shipping markets are seeing ‘disruption upside’ for the moment,” Clarksons noted in its latest weekly report. 

Meanwhile, oil prices eclipsed $115 per barrel for the first time since 2022 on Monday, with key energy outlets in the Middle East having issued force majeures, including BABCO, Bahrain’s oil company, Kuwaiti ports, and Qatar’s Ras Laffan.

The 16-year-old, Embiricos-owned Kalamos VLCC made history on Friday when it was fixed by Bharat Petroleum Corp for a stunning world record rate $770,000 per day, however analysts are suggesting the incredible VLCC boom could be short-lived if the Strait of Hormuz remains paralysed for a long period.

Persistent lost volumes may trigger market pressures, Clarksons suggested, with the Baltic Exchange’s spot VLCC rates retreating towards the end of last week.

Tanker broker Poten & Partners described the situation around Hormuz as “not sustainable” in its latest weekly report. 

“Eventually, the tankers waiting outside will leave the area to look for employment elsewhere,” Poten forecasted. “Middle Eastern producers will increasingly be forced to shut in production and lower global oil flows will dent ton-mile demand. Under this scenario, tanker rates will come under severe downward pressure.”

Shipping analysts at SEB, a Scandinavian bank, predicted that with the Persian Gulf remaining effectively closed, more and more open vessels will ballast towards the Atlantic to lift cargoes there, eventually overpopulating that market and weighing on rates.

The ongoing conflict has taken the lives of seafarers in the region. A tugboat providing assistance to the attacked Safeen Prestige containership came under attack itself on Friday, leading to the loss of at least four crewmembers. 

Secretary-general of the International Maritime Organization, Arsenio Dominguez, has called once again for international shipping not to be targeted. 

“This is unacceptable and unsustainable. All parties and stakeholders have an obligation to take necessary measures to ensure the protection of seafarers, including their rights and well-being, and the freedom of navigation, in accordance with international law,” Dominguez said on Friday.  

One of the reasons for the paralysis seen in the Middle East has been the lack of reasonably priced insurance, something the US has moved to alleviate. 

The US government unveiled on Friday(6 Mar) a $20bn reinsurance facility through the Development Finance Corporation (DFC) to provide war‑risk and political‑risk coverage. Launched by DFC chief Ben Black alongside treasury secretary Scott Bessent under a presidential directive, the rolling facility will insure losses up to about $20bn “for vessels that meet the criteria,” with implementation coordinated with CENTCOM. Details on eligibility and partner insurers remain limited, though the DFC said it has identified “best‑in‑class, preferred American insurance partners.” President Trump also vowed naval escorts if required.