India’s Reliance Industries has made headlines by agreeing to a record charter fee of $23 million to $25 million for a supertanker to transport Iraqi crude oil. This deal underscores the escalating shipping costs and a critical shortage of vessels willing to operate in the Gulf amid rising security concerns.
Reliance has booked the tanker to carry 2 million barrels of Iraqi crude at a staggering freight rate of 1,200 World Scale, which is about 12 times the normal benchmark rate. Before the US-Iran conflict that began in February 2026, similar shipments would have cost around $2 million. The vessel will be provided by South Korea’s Sinokor, one of the few shipowners willing to navigate the increasingly risky Strait of Hormuz.
Shipping companies are hesitant to deploy vessels in the region, leading to a sharp decrease in tanker availability. Security threats have prompted a surge in freight costs, forcing charterers like Reliance to offer steep premiums for operational vessels. Nevertheless, Reliance anticipates saving millions, thanks to Iraq’s state oil marketer SOMO providing discounts of $25 to $30 per barrel against Dubai benchmarks for lifting crude cargoes.
This record charter payment illustrates the widespread disruption in tanker markets since the onset of the US-Iran conflict. As security risks persist, shipping economics in the region will remain challenged, influencing how refiners source oil from Gulf terminals.
