1OCT

Supertanker hire passes $1.2m a day

4 min read

19:22UTC

Hiring a supertanker to carry Saudi crude to China passed $1.2 million a day for the first time on record in the week to 25 September, a 43 per cent rise in fifteen days. Brent November futures went the other way, from $107.35 a barrel to $97.68 in two days.

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Key takeaway

Freight set a record while crude fell, so the war premium now arrives at the pump.

Hiring a supertanker to carry Saudi crude to China passed $1.2 million a day for the first time on record in the week to Friday 25 September 2026⁠¹. Fifteen days earlier the same run paid $862,150 a day, a rise of 43 per cent⁠². The trade quotes that rate on an index called Worldscale, where 100 is the notional break-even cost of a voyage, recalculated each January for every route. The Ras Tanura to Ningbo run is the Baltic Exchange's benchmark, and it was assessed at Worldscale 1,157.5 against 821.11 on 10 September, roughly eleven and a half times the baseline⁠³. Brokers on a daily panel set that figure, and no cargo transacted at it.

Crude climbed over the same span and then surrendered the gain. Brent November futures stood at $107.35 a barrel shortly before 08:00 GMT on Monday 28 September, after President Donald Trump rejected Iran's offer to reopen the strait⁠⁴. They settled that session at $105.28 and stood at $97.68 at 22:47 UTC on Wednesday 30 September, roughly 9 per cent below the peak⁠⁵.

Refiners and shipowners meet those two prices at different points in the chain. The refiner buying the cargo pays the freight, not the shipowner carrying it, so the cost lands in the delivered price of a barrel rather than in the Brent headline. It then reaches the pump. American retail diesel averaged $6.382 a gallon in the week to 28 September, 70 per cent above a year earlier, against 43 per cent for petrol⁠⁶. Buyers are still taking the cargo: India's September imports ran at 575,000 barrels a day from Iraq and 566,000 from Saudi Arabia, back to pre-conflict rates⁠⁷.

Underwriters add a second charge the crude quote never shows. War-risk cover is priced as a percentage of what the ship itself is worth and charged per voyage, so 3 per cent on a $100m tanker is $3m for a single trip. Calls at Yanbu on the Red Sea have tripled to about 3 per cent from under 1 per cent in early July 2026⁠⁸. Southern Saudi ports stand at 7 per cent, and Hormuz runs at 6 to 9 per cent on assessments from Lloyd's List Intelligence and Dryad Global, and at 7.5 to 12.5 per cent on another market report the same week⁠⁹. Underwriters are quoting the same transit at two different prices, which means the market has not settled what the risk is worth. Rerouting to the Red Sea was the escape from the strait, and Aramco has already pushed barrels that way, but the underwriters have priced most of the saving away.

Deep Analysis

In plain English

There are two separate prices in an oil cargo. One is the price of the oil itself, quoted as Brent crude. The other is the cost of hiring the ship to carry it, called freight, which is quoted per day. In the week to 25 September 2026 the cost of hiring a supertanker to take Saudi crude from Ras Tanura to Ningbo in China passed $1.2 million a day, the highest on record, up 43 per cent in a fortnight. Over the same period the oil price went the other way: Brent fell from $107.35 a barrel on 28 September to $97.68 on 30 September. That looks contradictory and is not. The oil price moved on diplomacy, falling back after a three-day jump that followed President Trump's rejection of Iran's plan to reopen the strait. Freight moved on physical reality, because fewer owners will send a ship through a war zone and insurance on the voyage now costs millions. A buyer in Asia pays both bills, and this month the shipping bill rose faster than the oil bill fell.

Deep Analysis

Root Causes

Three conditions have to hold together for a single voyage to clear at this level: enough owners refusing Gulf business to shrink the available fleet, an insurance market quoting Hormuz transits at 6 to 9 per cent of hull value, and a buyer with no substitutable grade. Each on its own would move the rate a little; together they remove the owner's incentive to compete on price.

Saudi Arabia's East-West Pipeline was down from 10 to 22 September 2026, which removed the only large line carrying Saudi crude to the Red Sea without passing the strait. With the bypass gone, loadings moved to Ras Tanura inside The Gulf, so every barrel had to cross Hormuz and bid for the same scarce tonnage.

Escalation

Sideways on price, up on cost. Brent giving back its war premium while 135 ships sat holding position off the strait on 30 September shows traders pricing the diplomacy rather than the physical flow. The mechanism that would break the pattern is a cargo loss rather than a hull loss: a laden very large crude carrier sunk or burnt out would reprice both markets together, because it would put insurers rather than traders in charge of whether the voyage happens at all.

What could happen next?

Consequence
At this level the freight on a single Gulf to China voyage exceeds the ship's annual insurance cost, and the bill lands on the refiner rather than the shipowner.
Immediate · Assessed
Meaning
Brent falling 9 per cent below its 28 September peak while the freight record was being set shows the crude benchmark tracking negotiations and the freight market tracking the water.
Immediate · Assessed
Risk
Fujairah's bunker fuel stocks fell by 1.69 million barrels in a week, so the port the detour depends on is drawing down the supply that makes the detour possible.
Short term · Reported
Opportunity
Owners willing to take Gulf business are earning rates that will fund newbuilding orders, which would add tonnage to the market long after the risk that created the rate has gone.
Long term · Suggested

Source Landscape

This story draws on neutral-leaning sources from Qatar, United States and 1 more

Qatar

United States

India

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Primary parallel: Very large crude carrier rates spiked to then-record levels in October 2019 when Washington sanctioned two COSCO Shipping subsidiaries, removing compliant tonnage from the market overnight. The mechanism was identical to this one: supply of usable ships cut by legal and risk exclusion rather than by any change in cargo demand.

Counter-parallel: The April 2020 rate spike came from the opposite direction, when traders chartered tankers as floating storage during a collapse in oil demand and a contango market paid them to sit still. Same symptom, opposite cause, and that episode ended when the storage economics closed rather than when any risk receded.

American on-highway diesel averaged $6.382 a gallon in the week to 28 September 2026, 70 per cent above a year earlier, against 43 per cent for regular petrol. Diesel is the freight and agriculture fuel, so the 27-point gap between those two rises is where a middle-distillate squeeze reaches households indirectly, in the cost of moving everything else.

Fujairah, the bunkering port outside the strait that every rerouted ship depends on, reported total oil product stocks of 8.216 million barrels for the week to 28 September, down 2.08 million on the week, with residual fuels, the bunker grade, accounting for 1.69 million of the fall. Rerouting costs fuel, and the fuel is being drawn from the one port the reroute relies on.

Consensus view: The Baltic Exchange's TD3C figure is a daily broker panel assessment rather than a transacted price, and it repriced the loss of Saudi Arabia's Red Sea bypass far harder than the crude market did: freight rose 43 per cent over the fifteen days spanning the East-West Pipeline outage while Brent moved about 7 per cent over a comparable period. Freight has become a larger swing factor in the delivered price of Asian crude than the crude benchmark.

Counter-view: Sumit Ritolia, senior manager for oil markets and refining at Kpler, says economics, availability and refinery compatibility will continue to govern purchasing decisions, and India's September buying bears him out: Iraqi barrels up more than 250 per cent on August and Saudi up about 63 per cent. On that reading freight at this level is not rationing Asian demand at all, it is transferring margin from refiner to shipowner.

Key tension: Whether a freight cost of this size eventually forces an Asian refiner to switch crude grades, or whether refinery configuration locks the buyer into paying whatever the voyage costs.

First Reported In

Update #180 · Washington left Iraq as it answered Tehran

Splash247, reporting Baltic Exchange assessments· 1 Oct 2026

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Different Perspectives

Russia

Russia vetoed the same renewal on 17 September, arguing that Britain, France and Germany never validly triggered the snapback that reimposed the pre-2015 UN resolutions. No panel was ever seated under that mandate, so the UN list decays fastest for states that screen against it rather than against the American one.

China

China vetoed renewal of the UN sanctions monitoring mandate on 17 September, arguing that Resolution 2231 terminated on 18 October 2025 and that the Security Council should drop Iran's nuclear file altogether. On that reading there is nothing to monitor, so the sanctions survive and their enforcement does not.

Iraq

Baghdad saw the last American counter-Islamic State troops leave its territory on 30 September, completing a timetable it agreed with Washington in September 2024. Iraqi airspace deconfliction passes to Baghdad, which still has an open inquiry into the Maysan drone launches that has named nobody.

Pakistan

Treasury names Waseem Pasha Tajammal of Rawalpindi as the Cavalier group's chairman and places one of the designated incorporations in Islamabad. QatarEnergy separately told Pakistan that liquefied natural gas cargo cancellations would run through November, so Islamabad carries an enforcement question and a supply gap at once.

Turkey

Treasury named a Cavalier Dynamics company incorporated in Istanbul among the ten nodes it designated on 29 September, and Ankara has published no response. Turkey imported a record 120,000 barrels a day of Indian diesel in August, cutting Russia's share of its diesel imports to 20 per cent.

India

Suraj Yadav, a wiper from Uttar Pradesh, was killed aboard the Cape Dao on 23 September, and 19 of the ship's 20 Indian crew were taken off alive. India's September imports ran at 575,000 barrels a day from Iraq and 566,000 from Saudi Arabia, back to pre-conflict rates.