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Why Hormuz Disruption Sent VLCC Freight to Record Levels—and Split Physical Oil From Brent
TD3C, the Ras Tanura–Ningbo VLCC benchmark, crossed $1 million per day in mid September and was assessed above $1.2 million soon after. Damage to Saudi Arabia’s East West pipeline removed a key Hormuz bypass, prompting crude shuttle and ship to ship transfer arrangements near Sohar that add operational complexity an...
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Key takeaways
- TD3C, the Ras Tanura–Ningbo VLCC benchmark, crossed $1 million per day in mid September and was assessed above $1.2 million soon after.
- Damage to Saudi Arabia’s East West pipeline removed a key Hormuz bypass, prompting crude shuttle and ship to ship transfer arrangements near Sohar that add operational complexity and demand for vessels.
- More VLCCs have been ordered in 2026 than in all of 2025, but the ordering wave chiefly addresses future capacity: much of it is scheduled for delivery in 2028–2029.
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openai.comCreate a landscape editorial hero image for this Studio Global article: How has the post–late-February U.S. and Israeli strike disruption of the Strait of Hormuz—compounded by drone damage to Saudi Arabia’s East-. Article summary: The disruption has turned tanker capacity into the binding constraint on oil supply: crude may exist, but moving it safely and promptly has become exceptionally expensive. This lifts delivered physical-crude prices far m. Topic tags: general, news, general web, user generated, government. Style: premium digital editorial illustration, source-backed research mood, clean composition, high detail, modern web publication hero. Use reference image context only for broad subject, composition, and topical grounding; do not copy the exact image. Avoid: logos, brand marks, copyrighted characters, real person likenesses, fake screenshots, UI text, readable text, watermar
The oil-market shock is increasingly a logistics shock. Disruption to transit through the Strait of Hormuz raised the risk and cost of moving Gulf crude to Asia, while drone damage to Saudi Arabia’s East-West pipeline impaired a major route to the Red Sea. The result was an abrupt scramble for tanker capacity and a record surge in the Middle East Gulf-to-China VLCC market. 2
TD3C became a measure of scarce, risky transport
TD3C is the Baltic Exchange benchmark for a 270,000-tonne VLCC cargo from Ras Tanura in Saudi Arabia to Ningbo, China. It passed $1 million per day in time-charter-equivalent terms on September 14, reaching $1.035 million per day, according to reporting based on Baltic data. A subsequent market report put the route above $1.2 million per day.
That is an exceptional change from late February, when Reuters reported the Middle East-to-China VLCC benchmark at roughly $206,000 per day. The escalation did not simply raise the cost of fuel or lengthen a voyage. It made a transit through Hormuz a risk decision for shipowners, charterers and insurers. A September market assessment estimated that the risk premium for a Ras Tanura–Ningbo voyage versus comparable regional voyages was about $430,000 per day.
The crucial distinction is that TD3C is a calculated benchmark TCE, not a disclosed cash rate for every individual fixture. At extreme market conditions, the benchmark can incorporate route assumptions and risk pricing that differ from a specific charter party.
Saudi Arabia’s workaround still uses more shipping capacity
Saudi Arabia had used the East-West pipeline to move crude from its eastern producing region to Yanbu on the Red Sea, bypassing Hormuz. The pipeline has capacity of up to 7 million barrels per day, according to reporting on the shutdown following drone attacks. 2
After the damage, Aramco offered additional Gulf-loaded cargoes for ship-to-ship transfers near Sohar, Oman. Reuters reported that Saudi Arabia had sold about 60 million barrels from Ras Tanura for September and October loading through that arrangement. 1
The setup helps keep some supply moving, but it is not a frictionless substitute for a direct export route:
- A shuttle vessel must load inside the Gulf and transit the strait.
- Cargo must be transferred offshore near Sohar.
- A larger tanker waiting outside the strait can then carry the crude onward to Asia.
Each handoff adds scheduling, waiting and operational requirements. More importantly, it divides one straightforward export movement into multiple vessel commitments. Satellite-tracking data cited by Reuters showed Saudi loadings at Ras Tanura and Juaymah had risen to around two VLCC-equivalents per day during the shift. 3
Why freight matters more than the Brent screen
A refinery buys a particular grade of crude for delivery at a particular location and date. Its cost includes the crude price, freight, insurance, route risk and availability of a vessel. When transport becomes constrained, those components can move independently of a futures benchmark.
Brent futures do not fully capture the Hormuz bottleneck. If Brent futures are taken to delivery, the eligible crude grades load in Europe or the United States, rather than at a Middle East chokepoint. That helps explain why physical crude prices can diverge sharply from the headline futures price during a shipping disruption.
In April, Reuters reported that European and African physical crude prices rose even as futures sold off after a U.S.-Iran ceasefire; North Sea Forties reached $146.43 a barrel. A few days later, physical Forties was reported at a record $148.87 per barrel.
The per-barrel freight effect can be substantial. A VLCC commonly carries roughly 2 million barrels, so freight at these levels can materially alter the delivered price of a cargo. One market commentary estimated that Gulf-to-Asia freight had exceeded $22 per barrel, up from about $2 a year earlier, but the precise figure depends on voyage assumptions and should not be treated as a universal rate.
Refiners are paying up for barrels outside Hormuz
Asian and European refiners have responded by seeking replacement crude from outside the disrupted region. Reuters reported stronger buying interest in supplies from the United States, West Africa and Latin America, with premiums for Dubai/Oman, West African, U.S. and Latin American crudes reaching multi-month highs.
This is a change in both where crude is sourced and how long each ship is occupied. A U.S.-to-Asia, Brazil-to-Asia or West Africa-to-Asia voyage generally consumes more vessel time than a conventional Gulf-to-Asia run. The available fleet may not change in vessel count, but its effective capacity declines when each cargo requires more sailing days, repositioning or transfer time.
That is why the relevant constraint is not simply the number of VLCCs afloat. It is the amount of reliable tonne-mile capacity available to move cargoes when the shortest, most established routes are impaired.
Record newbuilding orders will not solve today’s tight market
Shipowners are responding to high earnings with a major ordering cycle. Reuters reported 217 VLCC orders in 2026 through mid-September, versus 93 in all of 2025, using Signal Group data; Allied Shipbroking recorded 164 orders versus 83. Both measures point to more than a doubling in ordering and the largest supertanker buying wave in at least 25 years. 17
But an orderbook is not an immediate supply response. Maritime Strategies International data cited in August indicated that about 83% of first-half 2026 VLCC orders were due for delivery in 2028–2029. 20 New ships therefore do little to relieve a market strained by current security risks, transfer delays and longer-haul replacement trade.
What could bring rates down?
A durable decline in VLCC freight would likely require some combination of safer and more predictable Hormuz transits, restored East-West pipeline throughput, fewer ship-to-ship transfer delays, or lower long-haul demand for replacement barrels.
Until then, the market’s central issue is not whether crude exists in the ground. It is whether refiners can secure the vessel, route and delivery window required to turn that crude into usable supply. The record TD3C readings show how quickly transport risk can become a dominant component of the physical oil price.
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What is the short answer to "Why Hormuz Disruption Sent VLCC Freight to Record Levels—and Split Physical Oil From Brent"?
TD3C, the Ras Tanura–Ningbo VLCC benchmark, crossed $1 million per day in mid September and was assessed above $1.2 million soon after.
What are the key points to validate first?
TD3C, the Ras Tanura–Ningbo VLCC benchmark, crossed $1 million per day in mid September and was assessed above $1.2 million soon after. Damage to Saudi Arabia’s East West pipeline removed a key Hormuz bypass, prompting crude shuttle and ship to ship transfer arrangements near Sohar that add operational complexity and demand for vessels.
What should I do next in practice?
More VLCCs have been ordered in 2026 than in all of 2025, but the ordering wave chiefly addresses future capacity: much of it is scheduled for delivery in 2028–2029.