Vintage Tonnage Captures the Freight Premium
Values for vintage VLCC and Suezmax tankers have surged well beyond their scrap worth, as regional hostilities in the Middle East drive freight rates and war-risk premiums to record levels.
According to a report by Hellenic Shipping News, the valuation of aging oil tankers has risen sharply, with 20-year-old Very Large Crude Carriers (VLCCs) now worth 3.4 times their recycling value. While five-year-old vessels are currently priced higher than newbuildings, the appreciation is most aggressive for older tonnage. This trend has shifted the economic incentive away from scrapping, as the potential earnings from continued trading now far exceed the returns from demolition yards.
Shipping conditions in the Middle East have deteriorated as the Strait of Hormuz becomes a focal point for military escalation between the U.S. and Iran. Recent incidents include projectile strikes on the tankers Sidr and Senegal Prosperity, as well as retaliatory strikes by U.S. forces against Iranian maritime assets. Iran has also expanded its vessel blacklist to 56 ships, threatening to seize or restrict any tankers found to be cooperating with non-compliant vessels.
The heightened risk environment has caused war-risk insurance premiums to jump from 0.25% to as much as 10% of hull value. TotalEnergies estimates that transiting a single VLCC through the region now costs approximately $20 million. Consequently, freight rates for Middle East routes have spiked, with VLCC earnings on the Singapore run exceeding $700,000 per day. This represents a gain of more than 900% compared to the previous year.
Despite high prices for secondhand ships, investment in new vessels remains robust, with a pipeline of 279 crude tankers scheduled for 2026 delivery. However, the immediate shortage of available tonnage East of Suez is keeping the freight premium elevated. Commercial players are increasingly avoiding blacklisted vessels to mitigate the risk of detention, further tightening the pool of compliant ships available for these high-value voyages.
Helena Marsh — Energy Markets Editor. Helena covers crude, refined products and the trading houses that move them, with a focus on price formation in the Mediterranean and Black Sea.
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