Oil prices, gas prices, and shipping freight rates are all rising simultaneously, marking a new phase of heightened tension in the global energy market.

Europe is entering winter with liquefied natural gas (LNG) inventories at their lowest level in nearly two decades. The Middle East conflict has disrupted LNG supplies from Qatar, sending natural gas and LNG prices soaring across Europe and Asia—and intensifying global competition for LNG cargoes that bypass geopolitically sensitive chokepoints. Go Katayama, Chief LNG Analyst at intelligence firm Kpler, told Bloomberg last week: “The possibility of a global ‘scramble for fuel’ has emerged—especially amid a cold winter.” As competition intensifies, spot LNG prices in Asia surged last week to their highest level since 2022. “Gas prices in Europe and Asia have risen sharply as markets adapt to longer-lasting LNG supply disruptions,” Timera Energy analysts wrote in a report earlier this week. “Europe is bidding up prices to compete with Asia for limited LNG cargoes.” Tanker freight rates have hit record highs. The Strait of Hormuz—as well as the Bab el-Mandeb Strait and the Red Sea—are critical maritime chokepoints for international oil and gas trade. Beyond oil and gas prices, the U.S.-Israel-Iran conflict has most severely impacted international oil shipping rates: on March 2, daily charter rates for Very Large Crude Carriers (VLCCs) breached $420,000; and the third phase of the U.S.-Iran conflict, which began on August 30, pushed international oil shipping rates to yet another historic high. Industry experts Tsvetana Paraskova and the financial analysis platform ZeroHedge reported on the latest developments in the international oil shipping market on September 10 and 11, respectively, on the website OilPrice.com. (1) Soaring shipping risks in the Middle East push tanker freight rates to record highs Escalating shipping risks for imports and exports in the Middle East have forced traders and tanker operators to adopt less efficient, higher-cost alternative routes—driving tanker freight rates to unprecedented highs. Although crude oil supplies remain physically available, transiting the Strait of Hormuz has become an extremely high-risk endeavor—particularly given the escalating tanker warfare between the U.S. and Iran in the Persian Gulf and the Gulf of Oman. Saudi Arabia has already begun exporting crude oil via northern Red Sea routes and Mediterranean ports in Egypt. A longer-term alternative is that shipowners and tanker companies have extended charter durations for tankers and VLCCs, causing extreme tightness in the available vessel market and pushing freight rates to record highs. For example, according to data compiled by Bloomberg, the benchmark daily rate for a VLCC transporting crude oil from the Middle East to China has reached nearly $800,000—a historic high. Currently, the cost of chartering a VLCC to transport crude oil from the U.S. Gulf Coast to Asia has soared to $29.5 million per voyage—not including additional surcharges for war-risk insurance or unexpected delays. Fearnleys, a shipbrokerage firm, stated in its latest weekly report covering the week ending September 9: “VLCC positioning lists are now extremely tight; no one would be surprised if the Fujairah/Far East rate rapidly breaches the WS 400 threshold in the near future—a figure that may sound insane.

India is preparing to resume transit through the Strait of Hormuz and dispatch tankers to the Middle East to load cargo.

Facing persistently tight energy supply conditions, India is preparing to re-deploy tankers through the Strait of Hormuz—marking its first major attempt to restore this critical shipping route since the outbreak of the Middle East conflict. According to Bloomberg’s report on May 20, citing informed sources, the related plan has been largely finalized; once granted final approval by the Indian government, vessels will begin attempting passage through the strait. The Shipping Corporation of India has prepared to return to the Persian Gulf and is ready to depart upon receiving formal authorization from the Indian Navy and confirmed orders from refiners. The Strait of Hormuz handles approximately one-fifth of the world’s oil flow. Since the outbreak of the Middle East conflict at the end of February, this route has effectively ground to a near halt—inflicting severe supply shocks and price pressures on countries like India, which are highly dependent on Middle Eastern energy. It remains unclear whether the U.S. and Iran have granted India a green light to proceed. Diplomatic negotiations, naval escorts, and insurance coverage India is advancing efforts on both diplomatic and military fronts to restore energy shipments via the Strait of Hormuz. According to Bloomberg, Indian External Affairs Minister Subrahmanyam Jaishankar met with Iranian Foreign Minister Abbas Araghchi last week on the sidelines of the BRICS Summit in New Delhi—an engagement widely interpreted as part of India’s diplomatic outreach to secure passage rights. On the military front, the Indian Navy has doubled the number of warships deployed in the region and intensified aerial reconnaissance operations.

India's HPCL Says Booking Tankers for Hormuz Still Complicated

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Indian refiner HPCL cites tanker booking challenges in the Strait of Hormuz despite rising crude supplies from the Persian Gulf. Vessel scarcity and last-minute cancellations are hindering oil shipments amid soaring freight costs.

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