Key facts
- Owners of oil product tankers are willing to resume direct voyages through the Strait of Hormuz.
- This willingness reduces the need for expensive ship-to-ship (STS) transfers previously adopted due to conflict.
- Several port-to-port fixtures have been concluded recently, signaling increased confidence.
- Despite renewed activity, clean exports from Mideast Gulf ports remain significantly below pre-conflict levels.
- STS transfers continue to be used, with at least eight ships loading via this method in June.
Owners of oil product tankers are showing renewed willingness to conduct direct voyages from the Mideast Gulf, a shift away from the costly ship-to-ship (STS) transfer arrangements that became prevalent during the US-Iran conflict. This indicates a growing confidence in the safety of navigating the Strait of Hormuz.
Since last week, at least three charterers have secured port-to-port fixtures in the region. This contrasts with previous bookings that largely involved STS loadings in the Gulf of Oman. The Nautilus, an LR1 tanker owned by Greece's Apex Shipping, was provisionally booked by Saudi Aramco's trading arm, ATS, for a naphtha voyage from the Mideast Gulf to Japan at WS375, with loading from July 8. The vessel is currently outside the Strait of Hormuz and will need to transit the waterway for loading and again on its outward journey.
Earlier signs of recovery included the provisional fixture of the MR tanker Lora for a Mideast Gulf to US Gulf voyage, the first such route since the conflict began. The Lora was already within the Strait of Hormuz, while owners outside remained hesitant to enter. A planned cargo to Europe on the LR2 tanker Sti Solace was also secured but later failed.
Despite this tentative return to direct loadings, transit risks and elevated insurance costs continue to influence the market. Combined clean exports from key Mideast Gulf ports have averaged 162,000 b/d in June, a significant decrease from 1.66 million b/d in February. Market participants and ship-tracking data indicate that vessels continue to load oil products via STS transfers outside the Strait of Hormuz, with at least eight ships utilizing this method in June. Additional STS activity has been reported off India's west coast.
A planned meeting between US and Iranian negotiators in Qatar is expected to potentially ease tensions, which could further reduce reliance on STS and shuttle arrangements.