Gulf oil producers including the United Arab Emirates (UAE) are building large-scale tanker fleets to sustain crude exports despite Iran’s attack threats, sending tanker prices to their highest levels in more than a decade.
According to a Financial Times (FT) report on the 19th (local time), tanker demand has surged as Gulf oil producers seek ways to transport crude through the Strait of Hormuz. Data compiled by shipbroker Braemar shows that in the second quarter, prices for both newbuild and second-hand Very Large Crude Carriers (VLCCs) exceeded $130 million (approximately 180 billion won) per vessel—the highest level since 2008.
FT analyzed that “oil-producing nations seeking to move cargo out have driven this price surge.” Behind Gulf producers’ aggressive push to secure their own tanker fleets lies the desperate reality that the extreme risk to commercial shipping in the Strait of Hormuz is threatening crude exports—the lifeline of their economies.
The UAE is the most aggressive in securing tankers to maintain crude exports. The Abu Dhabi National Oil Company (ADNOC) has built a “shuttle tanker” system that loads crude inside the Persian Gulf and transports it beyond the Strait of Hormuz. In effect, ADNOC is operating a “strike force” fleet that takes responsibility for cargo exclusively through the most dangerous stretch of the strait, on behalf of foreign vessels reluctant to enter the Persian Gulf.
ADNOC acquired six VLCCs and five large liquefied natural gas (LNG) carriers for $1.3 billion (approximately 1.8 trillion won) this month alone. FT reported that “ADNOC has been attacked by Iran in the Strait of Hormuz almost daily, but has been able to continue crude exports thanks to securing its own tankers.” The company is reportedly holding out through a “war of attrition,” continuously purchasing and deploying new vessels even as Iranian attacks render some tankers inoperable.
According to shipping data analytics firm Vortexa, 29 tankers currently account for more than half of all traffic transiting the Strait of Hormuz. Saudi Arabia, which has been expanding operations of its east-west pipeline to the Red Sea to avoid the strait’s risks, is also expected to join the shuttle tanker system.
Meanwhile, international oil prices extended gains for a fourth consecutive session amid the ongoing standoff between Iran and the United States. West Texas Intermediate (WTI) crude for October delivery traded above $84 per barrel, while Brent crude settled near $92 per barrel. US President Donald Trump told reporters there is “a lot” of crude passing through the Strait of Hormuz, but remained noncommittal on resuming dialogue with Iran, saying it “could be possible at some point.”
Another factor behind rising oil prices is the UAE’s announcement that it would sever all economic relations with Tehran, condemning Iran’s ballistic missile launch toward UAE territory. Given that the UAE has served as a key financial and business hub for Iranians, this move is expected to deepen Iran’s economic isolation.
US Energy Information Administration (EIA) data also provided support for oil prices. Refinery utilization rates climbed to their highest level since 2019, and nationwide distillate inventories fell to their lowest level in over a month amid diesel supply shortage concerns. This offset last week’s 4.4 million barrel increase in crude inventories.
As tensions surrounding the Strait of Hormuz persist for months, maritime traffic remains well below normal levels, but assessments suggest Persian Gulf oil producers are becoming increasingly adept at exporting crude through covert methods. Axios reported that the US military recently established a transit corridor through the Strait of Hormuz.