Hormuz Watch: The Rate Is $1.2 Million a Day. The Ships Earn About $155,000.

From the Strait to the Ships

Part 1 of this series found that the crisis had moved downstream. Crude is crossing the Strait of Hormuz at prewar volumes again, but refined fuel is moving at about a fifth of normal, and the price of diesel has pulled away from the price of crude.

Between the oil field and the refinery sits the ship. A supertanker, known in the industry as a VLCC, carries about 2 million barrels of crude. The Baltic Exchange publishes the benchmark price to hire one for the trip from the Persian Gulf to China. On Friday it stood at $1,221,893 a day. At the end of February, just before the war began, it was $209,000.

That raises two questions: who is collecting that money, and how long can it last? The short answers are the tanker owners, and not long, if the past is a guide. The details are more useful than either answer.

The Dashboard

Brent was the only reading with a new number on Monday. December futures fell 1.9% after Saudi Aramco cut its November prices for Asian buyers to a six-year low, a move The National reported as an effort to win back Asian sales as Gulf shipments recover. The other readings come from weekly releases: EIA spot and retail prices, Kpler flow data and the Baltic Exchange tanker report.

• Crude through Hormuz13.5Mbbl/dayBack to prewar7-day average to Sep 28. JPMorgan puts Middle East shipments at 98% of prewar.Kpler via CNBC; JPMorgan via The National
• Refined fuel through Hormuz677Kbbl/dayDown 81%Prewar: 3.6M a day of diesel, jet fuel and other products. 7-day average to Sep 28.Kpler via CNBC
• Brent, now vs. December$114vs. $100Relief priced inPhysical cargoes, Sep 29 (latest EIA). December futures settled at $100.32 Monday, down 1.9%.EIA spot; futures settlement
• Diesel margin$114per bblRecord territoryDiesel minus the crude it is made from, Sep 29 (latest EIA). 2025 average: $32.EIA spot; our calculation
• Supertanker day rate$1.22Mper dayNearly 6x prewarGulf to China benchmark, Oct 2. Late February: $209K. What owners booked for Q3: about $155K.Baltic Exchange; Seatrade; company reports
• Pump diesel$6.38per galUp 70%National average, Sep 28 (latest EIA), vs. $3.75 a year earlier.EIA weekly retail

Where the Rate Comes From

The rate is high because ships are tied up, not because there is more oil to carry. Three things are tying them up.

• Shuttles. Large tankers that used to load inside the Gulf now wait in the Gulf of Oman while smaller ships ferry crude out to them. That takes more ships to move the same oil. According to an analyst cited by Reuters, exporting the volume that needed 24 supertankers in August took 40 in September.
• Detours. Houthi attacks pushed tankers out of the Bab al-Mandab, so crude leaving Saudi Arabia's Red Sea port of Yanbu now sails north through Suez instead. Tankers that go around Africa's Cape of Good Hope add 3,500 to 4,000 nautical miles and 10 to 14 days per voyage.
• Danger. At least eight tankers were struck in or near the strait between September 28 and October 4, and owners charge more to send a ship into a war zone.

Here is what one voyage costs. On September 30, Seatrade Maritime reported that South Korea's SK Energy hired the DHT Gazelle, a supertanker built this year, for $55 million to carry 270,000 tonnes of crude from the Red Sea through Suez to Korea. That is roughly 2 million barrels, so the freight alone came to about $28 a barrel. A new supertanker costs about $130 million to build. One voyage paid for about 42% of a new ship.

Think of ride-share surge pricing during a storm. The price on the screen is real, but it applies to the next ride. It is not what every driver earned all week.

What the Ships Actually Earn

Most tankers are booked weeks ahead, and the benchmark prices a single voyage on a single route at today's risk. What owners actually collect shows up in their quarterly reports.

• Frontline (FRO) owns 37 supertankers plus 37 smaller crude and product tankers. Its supertankers earned an average of $152,700 a day in the second quarter. By late August it had booked 86% of their third-quarter spot days at $156,900. In the last quarter of 2025, before the war, they earned $74,200.
• DHT Holdings (DHT) owns 23 supertankers. They earned $162,600 a day on spot voyages in the second quarter, and DHT had booked 58% of its third-quarter spot days at $152,700.
• Teekay Tankers (TNK) runs smaller crude tankers. Its Suezmaxes earned $109,200 a day in the second quarter, against $33,100 a year earlier. Its Aframax and LR2 ships earned $74,100, against $31,500.

So what owners earn has risen about two to three times, not six. The September spike will show up in fourth-quarter results, but only on the voyages booked at those rates.

That is still a windfall. All five companies in this piece reported record second-quarter profits. Frontline earned $659.2 million and declared $3.41 a share in dividends, including a $0.80 special payout from ship sales. International Seaways (INSW), which has 68 crude and product tankers including four on order, earned $295 million and declared $5.05 a share. DHT pays out all of its ordinary profit and declared $1.22 a share. Teekay and Scorpio Tankers (STNG), which owns 64 product tankers that carry diesel and gasoline, kept most of their profits, declaring dividends of $0.25 and $0.45.

What the Market Is Pricing

The stocks rose, but nothing like the rate. Through Monday, the five were up between 70% and 146% this year.

Two details in the table matter. First, much of the gain came before the war. Frontline rose 74% between New Year's Eve and February 27, while rates were already climbing. Since the war started, it is up 42%. Second, the stocks have not moved with the rate. On April 8, the day the ceasefire knocked Brent down 13%, all five rose, by 1.6% to 4.3%. From April 30 to July 2, when the June deal pulled rates down, they moved anywhere from a 14% loss to a 1% gain.

The last column is a simple way to see what the market expects. If every quarter for a year looked like the second quarter, Frontline would earn about $11.84 a share. Its stock costs $53.75, about four and a half years of those profits. Four of the five trade at four to five years of second-quarter profits, and Scorpio at under three. That is how a market prices earnings it expects to shrink.

The charter market says the same thing more directly. In July, DHT hired out one of its supertankers for three years at $75,000 a day, starting in September. In August, Frontline said it could sign multi-year charters at around $80,000 a day or higher. The companies and customers signing three-year contracts are pricing a normal day at about 6% of Friday's benchmark.

How Fast Booms End

Tanker spikes have a pattern. They end when the ships come back.

• October 2019. After the U.S. sanctioned units of China's COSCO, supertanker rates hit $295,100 a day on October 11, according to Clarksons Platou Securities. Five days later they were $124,727, down 58%.
• Spring 2020. When oil traders filled tankers to store crude at sea, rates topped $250,000 a day in March. By June 24 they were about $20,000, a 92% drop in roughly three months.
• Summer 2026. After the June deal, the Baltic Exchange's average supertanker earnings fell to $175,349 a day by July 2. When the ceasefire collapsed and ships were tied up again, they rose almost 180% by September 10.

The reason is the same each time. A tanker spike does not destroy ships. It strands them, in queues, on detours and in waiting areas. When the routes reopen, the ships return to the market at once, and the rate can fall as fast as it rose. That is the difference from refineries, which is where this series goes tomorrow.

New ships are coming too. The tanker orderbook equals 25% of the existing fleet's capacity, according to Breakwave Advisors, and a five-year-old supertanker now sells for about $151 million, more than the $130 million it costs to build a new one. Owners are ordering ships because today's rates pay for them. Those ships arrive over the next few years, whatever rates look like by then.

What If a Deal Lands Tomorrow

Of all the prices in this series, tanker rates would likely move first. Two things happened on Monday that point that way.

• The Red Sea route. Yemeni government forces, backed by Saudi air power, said they had taken control of the Bab al-Mandab area and the port of Mokha from the Houthis. If tankers return to the southern Red Sea, voyages from Yanbu to Asia get shorter, and fewer ships are needed.
• The Gulf flows. Saudi Aramco cut its November crude prices for Asian buyers to a six-year low. Traders had expected a $5 increase. JPMorgan puts Middle East shipments at 98% of prewar levels.

Here is the strongest case that the owners keep winning anyway.

• The cash is locked in. Most third-quarter voyages were booked at around $150,000 a day, and fourth-quarter bookings include some of September's rates.
• Management sees a longer run. Frontline says this market has "no playbook" and dwarfs previous cycles, and points to constricted supply and energy security as winter approaches. DHT cites longer trade routes and what it calls structural supply consolidation.
• Routes may stay long. Buyers that lost Gulf supply have found it farther away, and some of those longer trades may outlast a deal.

Our read: the cash is real, and the market already assumes the spike is temporary. The stocks never priced $1.2 million a day, so they may not fall as far as the rate when it breaks. But they roughly doubled this year on earnings that are two to three times their prewar level, and that is the part a deal would test.

What the Wealth Engine Scores Say

Before we get to the verdict, here is what the Wealth Engine Pro platform's systematic scoring shows for all five stocks right now.

Four of the five score Strong on Company Strength, and Frontline scores Moderate. All five carry a Bullish outlook, and every fair value shown sits above the current price, three of them labeled Deep Value. On the platform's numbers, these are solid companies at low prices. That runs against the caution in this article.

These scores are systematic. They evaluate companies based on reported financials, balance sheet quality, moat characteristics, and valuation models (DCF, peer comparison, earnings power). They measure what a company is today, not what it might become. That is by design: the scoring system is built to keep emotion and forward speculation out of the numbers.

This article is doing something different. It is making an editorial argument about how long record earnings last. The scores read the best quarters in these companies' history, so a valuation model will call the stocks cheap until lower rates show up in filings. The charter market and the stock market are already answering that question. Three-year charters at $75,000 to $80,000 a day, and share prices at four to five years of second-quarter profits, both price those earnings as temporary.

Both perspectives are real data. The platform tells you the current fundamentals are solid. The article argues that current earnings are the part most likely to change. Transparent investors use both.

The Bottom Line

The $1.2 million rate is real, but it is the price of the next voyage on the most dangerous route, not the industry's paycheck. The owners are earning two to three times their prewar rates, their stocks have roughly doubled, and the people signing three-year contracts are pricing a normal day at a small fraction of the headline. Every number below the headline says the same thing: the market treats this boom as temporary, and the last two big spikes gave back most of their gains within three months.

Tomorrow: the refiners, where the damage is physical and the repairs take months.