Oil Rallies Almost 5%, Closes at Highest Level Since January 2025 on Mideast Tensions

Oil prices jumped 4.7% Tuesday, with Brent settling at $81.40 and WTI at $74.56, their highest levels since early 2025, as U.S.-Israel attacks on Iran and Tehran’s retaliation threatened energy flows through the Strait of Hormuz. Iraq cut output by nearly 1.5 million bpd, while tanker traffic slowed sharply after insurers withdrew coverage and Iran warned it would target ships in the strait. Qatar halted LNG production, Israel shut some gas fields, and Saudi Arabia closed its largest refinery, further tightening supply. Diesel futures surged about 10% and gasoline nearly 4%, while refining margins spiked and global gas prices climbed. Although prices briefly hit higher intraday levels, gains eased after President Trump suggested the conflict could be shorter than feared.

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Headlines

· Trump Signals Naval Escorts, Insurance Backstop for Gulf Tankers

· Saudi Aramco Reroutes Oil to Red Sea as Hormuz Traffic Stalls

· Iraq Slashes Oil Output as Hormuz Blockage Strains Storage

· Fujairah Bunkering Slows After Fire, Demand Shifts to Singapore

· China Refiners Cut Runs as Iran War Tightens Oil Supply

· India Seeks Backup Energy Supplies as Hormuz Shipping Stalls

· Asia Races for LNG Supplies After Qatar Halts Output

· Mars Blend Jumps to Six-Year High as Mideast Risks Boost US Sour Crude

· Brent’s Spread Over Dubai Crude Expands Beyond $6 per Barrel

· Strait of Hormuz Disruptions Push VLCC Rates Near $500,000 a Day

· Minerva Fixes VLCC at All-Time High Spot Rate

· Dynacom Tanker Breaks Through Strait of Hormuz into the Gulf

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Dynacom Tanker Breaks Through Strait of Hormuz into the Gulf

A Dynacom Tankers suezmax owned by George Procopiou sailed into the Strait of Hormuz toward the Gulf despite escalating conflict and threats from Iran’s Revolutionary Guard, becoming one of the few vessels to transit inward as most tankers remain stranded. The 150,000-dwt Pola is expected to load crude for Thailand, even as traffic through the chokepoint — which previously handled about 30% of seaborne crude — has collapsed and freight rates have surged amid minimal fixing activity. Maritime data show tanker numbers in the strait have plunged, with thousands of ships trapped in the region, intensifying pressure on global energy markets and efforts by the US and others to restore safe passage.

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Saudi Aramco Reroutes Oil to Red Sea as Hormuz Traffic Stalls

Saudi Aramco is redirecting some crude exports to the Red Sea port of Yanbu via its East-West Pipeline to bypass the Strait of Hormuz, where Iran war risks have effectively halted Gulf shipping. With Brent up 12% this week and hundreds of vessels stranded, Saudi Arabia faces storage pressure similar to Iraq, which has already cut 1.5 million bpd. While the pipeline can carry up to 5 million bpd, traders question whether Yanbu can load such volumes, and tanker rates there have more than doubled. The alternative route also carries security risks, with concerns over potential attacks in both the Red Sea and at UAE export infrastructure.

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Iraq Slashes Oil Output as Hormuz Blockage Strains Storage

Iraq has cut nearly 1.5 million barrels per day of production and may reduce more than 3 million bpd within days if exports through the Strait of Hormuz remain blocked, Iraqi oil officials said. Output has been curtailed at major fields including Rumaila (–700,000 bpd), West Qurna 2 (–460,000 bpd) and Maysan (–325,000 bpd) as storage fills up at southern ports. Iraq, which produced about 4 million bpd in January, relies heavily on exports to China and India, while domestic refining capacity stands near 1.1 million bpd. Officials said refinery operations remain unaffected for now, but prolonged shipping disruptions could force deeper supply cuts as the regional conflict continues to choke off Gulf energy flows.

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Fujairah Bunkering Slows After Fire, Demand Shifts to Singapore

Ship refuelling at Fujairah in the UAE has slowed after a fire forced terminal operators VTTI and Vopak to suspend operations, compounding disruption from the Iran conflict that has nearly halted traffic through the Strait of Hormuz. Marine fuel premiums at Fujairah surged to over $30 per ton above Singapore quotes, up sharply from last week, stalling sales as suppliers and shipowners reassess risks. With vessels stranded and Gulf transits gridlocked, traders expect bunker demand to shift to hubs such as Singapore, Rotterdam and India, potentially tightening supply and lifting prices further if the conflict persists.

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Trump Signals Naval Escorts, Insurance Backstop for Gulf Tankers

Donald Trump said the U.S. Navy could escort oil tankers through the Strait of Hormuz and ordered the U.S. International Development Finance Corporation to provide political risk insurance and financial guarantees to support Gulf shipping amid soaring energy prices. With war-risk premiums surging and tanker traffic disrupted, the move marks a major effort to secure global oil flows, though analysts warn limited naval capacity and ongoing fighting may keep insurance costs high and prices elevated. The administration is also weighing further steps, including potentially tapping the Strategic Petroleum Reserve if disruptions persist.

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China Refiners Cut Runs as Iran War Tightens Oil Supply

Major Chinese refiners are reducing crude throughput as the Middle East conflict disrupts oil shipments through the Strait of Hormuz, a key route for about 20% of global supply, tightening feedstock availability. Zhejiang Petrochemical Corp, backed by Saudi Aramco, is advancing maintenance on a 200,000 bpd unit that will cut runs by about 20%, while Fujian Refining and Petrochemical Co has shut its 80,000 bpd unit amid the squeeze. China sources roughly half its crude from the Middle East, and the broader run cuts reflect precautionary steps as prices surge and tanker access remains constrained by the ongoing conflict.

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Mars Blend Jumps to Six-Year High as Mideast Risks Boost US Sour Crude

US sour crude prices surged to multi-year highs after a Japanese refiner increased purchases of Mars Blend and WTI amid mounting Middle East supply risks. Mars traded at its strongest premium since 2020, while similar Gulf of Mexico grades such as Southern Green Canyon and Poseidon also rallied, even as US–Asia freight costs soared to nearly $27 million per voyage. The price spike reflects growing substitution demand as Iraqi output cuts and regional disruptions tighten heavy and sour crude supply, with Canadian grades also strengthening on replacement expectations.

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Indonesian Petrochemical Giant Announces Force Majeure as Iran War Hampers Feedstock

Indonesia’s largest petrochemical producer, PT Chandra Asri Pacific, declared force majeure after feedstock shipments were disrupted by the Iran conflict and near-halted traffic through the Strait of Hormuz. The company said the duration of the disruption is uncertain and it will cut plant run rates to protect operations. The move underscores the widening industrial impact of the war, with its shares falling to the lowest level in nearly a year.

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Druzhba pipeline Damaged by Fire After Russian Strike

Ukraine said the Druzhba pipeline, a key route supplying Russian oil to Hungary and Slovakia, suffered extensive internal fire damage after a Russian strike on pumping facilities in late January, with flows suspended since January 27. Most internal equipment, including sensors, was reportedly damaged by extreme heat, and repair costs and timelines are still being assessed. The outage has fueled tensions within the EU, as transit volumes this year have already dropped to a 10-year low, further tightening regional energy supply.

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Strait of Hormuz Disruptions Push VLCC Rates Near $500,000 a Day

Freight rates for VLCCs on the benchmark Middle East–China route surged to over $481,000 per day, a record high, as traffic through the Strait of Hormuz remains severely limited amid the Iran conflict. Rates have quadrupled since mid-February, driven by war-related disruptions, tight vessel availability and earlier fleet demand. US Gulf Coast–Asia voyage costs also jumped to $26.9 million, or more than $13 per barrel, marking the largest share of WTI prices since 2020 and adding pressure on global oil trade flows.

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Minerva Fixes VLCC at All-Time High Spot Rate Amid Surging Tanker Profits

Greek owner Minerva Marine’s 317,000-dwt Pantanassa was fixed by GS Caltex at a record $436,000 per day for a 60-day voyage worth about $26.2 million, marking the highest ever reported VLCC spot rate as Middle East shipments were severely curtailed after attacks on Iran. The deal surpasses the previous 2019 record of $307,000 and confirms “astronomical” paper rates above $400,000 per day, while other fixtures — including Angelicoussis Group’s Maran Thaleia and DHT Holdings’ DHT Puma — also secured sharply elevated earnings. The Baltic Exchange assessed Middle East–Asia returns near $431,800 per day, up 140% in a week, though brokers caution that limited activity means many rate indications remain theoretical amid extreme volatility.