An extraordinary simultaneous build-up of ballast vessels across every major crude tanker segment has moved geopolitically driven disruption into a fundamental demand-side crisis.

With the Strait of Hormuz now closed for 60 days, the initial freight rate spike driven by risk premium and trade inefficiency has given way as there simply are not enough cargoes to go around. According to Sentosa Shipbrokers, VLCCs are running at approximately 55% ballast, while suezmaxes and aframaxes are both sitting at 51%. The simultaneous crossing of the 50% threshold across all three segments is highly unusual.

“While individual segments can periodically swing long on ballast, a simultaneous skew across all classes is highly unusual and highlights the extent of cargo weakness,” Sentosa said, noting that global seaborne crude exports have fallen 19% since the conflict began, with refined products down 11%.

Crude tanker markets have begun adapting to Hormuz’s closure, with Saudi exports rerouted via Yanbu averaging around 3.6m barrels per day in recent weeks, and Emirati exports from Fujairah rising by some 400,000 barrels per day over the past two months. But these rerouting efforts are running into their own constraints. An Iranian attack on a pumping station two weeks ago raised doubts about whether Yanbu can sustain higher export volumes, while Iraqi flows via the northern pipeline to Ceyhan remain stuck at around 250,000 barrels per day against a 600,000 barrel per day capacity.

For clean tankers, broker BRS highlighted in a new report that there remains no way to evacuate the nearly 4m barrels per day of refined products previously exported through Hormuz. Global product markets are described as “extremely tight,” with kerosene particularly affected given the Middle East’s previous 30% share of global kerosene exports. BRS warned that fuel shortages currently centred on Asia could spread to western net importers within weeks, potentially triggering widespread flight cancellations and broader demand destruction.

“We calculate that over the coming months, in order for the global oil market to balance, global oil demand will need to decrease by around 5 mb/d, something which has the potential to initiate a global economic slowdown,” BRS said.

Bunker markets are also feeling the strain. Despite easing from recent highs, marine fuel availability remains constrained across Asia. AXSMarine data cited by BRS shows tanker waiting times in Singapore are up approximately 1.5 days year-on-year, while the premium of VLSFO over 380 cst fuel has narrowed sharply to around $60 per metric tonne from approximately $135 per metric tonne just one month ago, reflecting tightening high sulphur fuel oil availability as Middle Eastern sour crude exports dwindle.

Atlantic Basin VLCC rates are buckling under the weight of ballasters repositioning from the Persian Gulf. Rates on the USGC-to-China route remain only marginally above pre-conflict levels despite near-record US crude export volumes – and when higher bunker costs are factored in, Atlantic VLCC earnings have fallen below late-February levels.

Clean tanker rates are holding up better, partly supported by Jones Act waivers that have more than doubled transport fuel shipments from the US Gulf Coast to the West Coast. Washington’s 90-day extension of the waiver through to mid-August should provide some continued support to Atlantic MR and LR earnings, BRS said.

The road back to normality looks long. “Despite the overriding uncertainty, what appears clear is that tanker freight should remain extremely volatile for a significant time yet,” BRS concluded.