The Hormuz crisis is fundamentally breaking the long-standing “age discount” logic of the tanker market. Currently, a VLCC with a service life of only 5 years has a market transaction price even higher than the newbuilding price at a Korean shipyard.
According to the latest “Tanker Market Monitor” report released by Signal Ocean, this “inversion” phenomenon in the asset pricing system has now spread to major crude oil tanker types. Data shows that the market valuation of a 5-year-old VLCC is approximately $9 million higher than the contract price for a similar newbuilding at a Korean shipyard; the secondhand price of Suezmax tankers is almost on par with newbuildings; and the Aframax market also shows a clear inversion.
Even more striking is the resale market. To secure “immediately available tonnage,” buyers are scrambling to acquire vessels at high costs. Currently, the premium for a resale VLCC over the newbuilding price has reached as high as $45.5 million, with overall resale market premiums ranging from 21% to 35% above newbuilding prices.
Signal Ocean points out that under normal market conditions, resale vessels typically command only a limited premium for saving waiting time for delivery, while a 5-year-old vessel should logically be priced significantly below a newbuilding. However, both of these traditional pricing rules have now completely broken down.
Behind this shift lies a fundamental restructuring of the global tanker market’s operational logic, following the closure of the Strait of Hormuz for over 60 days. With vessel traffic through the Strait of Hormuz plummeting by more than 95% compared to pre-conflict levels, the traditional Middle East export route system has been forced into near-complete reorganization.
Currently, shipowners willing to deploy tonnage to Atlantic market routes—especially those accepting cargoes loaded from the U.S. Gulf for voyages to Asia—are reaping significant premium returns. On the other hand, buyers unable to accept the 18- to 24-month delivery cycle for newbuildings are forced to compete for spot tonnage at higher prices.
However, signals from the freight market are more complex. Although tanker freight rates remain at historically high levels, Norwegian shipbroker Fearnleys stated this week that VLCC daily earnings are still hovering near $100,000, but downward pressure on the market has already begun to emerge.
Fearnleys notes that the issue of insufficient cargo volumes is becoming increasingly apparent, with freight rate pressure continuing to intensify.
This pressure is not a short-term fluctuation but a structural problem. Previously, reports indicated a simultaneous accumulation of a large number of ballasting vessels, suggesting that the crisis has evolved from a mere geopolitical disruption into a demand-side imbalance.
Currently, the ballasting ratio for VLCCs has reached approximately 55%, while the ballasting ratios for Suezmax and Aframax vessels have also reached 51% respectively. All three major tanker types have simultaneously exceeded the 50% ballasting threshold.
Signal Ocean data shows that the backlog of ballasting VLCCs in the U.S. Gulf is rapidly worsening, with the average number of idle VLCCs approaching 60 vessels. This is one of the key reasons for the downward pressure on Atlantic market freight rates since early May.
On a monthly basis, the current freight rate index has fallen by 34% month-on-month, though it remains 78% higher year-on-year. Meanwhile, the average daily number of vessels on the TD22 route has quickly rebounded from a record low of just 2 vessels in early April to over 20 vessels currently.
