- Fears of attacks on commercial ships.
- Insurance premiums expected to rise.
Spot tanker freight rates across Asia have surged to their highest levels of 2025 as geopolitical tensions between Israel and Iran stoke fears of possible ship attacks, reports Platts.
The growing conflict has led to a surge in war-risk premiums and chartering costs, particularly on routes passing through the Strait of Hormuz—a vital corridor for global energy shipments.
Asian Tanker Freight Surges
Market participants report heightened anxiety as shipowners demand increased compensation for operating in what is now considered a high-risk area. A broker based in the UAE warned that a missile conflict between Israel and Iran could increasingly involve commercial vessels, making damaging incidents “highly likely.” With few alternative routes to bypass the Strait of Hormuz, charterers are left with limited options, pushing up rates even further.
The spike in freight rates is evident across multiple tanker segments. On the Gulf-to-Japan route, ExxonMobil chartered the Greek-owned LR1 tanker Constantinos at Worldscale 195 (w195) for a naphtha cargo—a new high for 2025, eclipsing the previous w180 fixed in March. Elsewhere, Shell fixed the Vitol-operated Elandra Oak on the Gulf–East Africa route at a rate of w335 for a late-June fuel cargo, significantly above the w285 fetched by a previous charter on the same route.
The rally in rates isn’t confined to LR1 and LR2 tankers; VLCC and Aframax segments are also experiencing sharp increases in freight rates as war-risk fears ripple throughout the shipping industry.
While freight rates have surged rapidly, insurance costs have not yet escalated to the same degree. However, industry insiders warn that a sharp jump in insurance premiums could follow if civilian vessels are directly targeted in the conflict. Arabian War Risk Premiums (AWRPs), which previously hovered around 0.05% of cargo or hull value for a seven-day Gulf transit, are now expected to rise—possibly to 0.1% or higher, particularly for smaller shipping companies.
One broker noted that a 21-day AWRP for an LR2 tanker had already reached approximately \$40,000, indicating that insurers are beginning to price in the heightened risk of operating in the Gulf.
As tensions persist, the regional tanker market is bracing for more volatility, with freight and insurance costs continuing to rise in tandem with geopolitical instability.
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Source: Platts
