VLCC MEG to China Freight Blows Out: TD3C Hits Highest Since 2020 as U.S.–Iran Risk Tightens Tonnage
Middle East to China VLCC freight just pushed into “extreme” territory, with benchmark earnings breaking above $200,000 per day, as U.S.–Iran risk keeps owners demanding a bigger premium for Arabian Gulf exposure and charterers rush to lock in liftings. The result is a market that feels tight even before any physical disruption, because the risk premium is now embedded in fixture decisions, insurance posture, and prompt availability for compliant tonnage.
Subscribe to the Ship Universe Weekly Newsletter
Click here for 30 second summary of the full piece ▶
MEG to China VLCC freight hits extremes as U.S.–Iran risk stays priced in
Middle East to China VLCC earnings surged to above $200,000 per day, the highest since 2020, with the Baltic Exchange benchmark TD3C assessed around WS 218.52. The move is being driven by a mix of elevated Arabian Gulf risk, heavier crude export programs, and a tight pool of readily available compliant tonnage.
- Rate snapshot: TD3C climbed to WS 218.52, translating to roughly $206k/day.
- Tightening: prompt vessel supply, as buyers accelerate bookings and owners require larger compensation for exposure near Hormuz.
- Operational focus point: Middle East loadings to Northeast Asia, where fixture timing and availability swing fastest.
With risk premium now embedded in MEG exposure, charterers are paying for certainty, and owners are rationing availability, keeping TD3C elevated and volatile even without a physical chokepoint disruption.
| Fast reader take | Rate snapshot | Happening Now | Negative shipping consequence | Shows up first | Closest stakeholders |
|---|---|---|---|---|---|
| TD3C blows out to highs not seen since 2020 |
TD3C reached WS 218.52, about $206,141/day.
TD3C WS 218.52
$206k/day
Highest since 2020
|
Elevated geopolitical risk premium plus heavier bookings for Middle East barrels into Asia, with a tight pool of prompt compliant ships. | Costs spike fast and availability thins, increasing the chance of delayed stems, widened bid-ask spreads, and last-minute substitution risk. | Prompt fixture windows, short-list tonnage counts, and ballast positions for MEG loading dates. | Chartering desks, cargo schedulers, tanker owners, brokers. |
| U.S.–Iran risk is being priced into MEG exposure |
Simmering tensions and concern around the Strait of Hormuz, a key conduit for seaborne oil exports.
Hormuz risk
War-risk premium
|
Owners demand more compensation for perceived voyage risk, while buyers accelerate coverage for nearby loadings. | Volatility increases, and voyage economics can flip quickly, especially when war-risk insurance and rerouting clauses tighten. | War-risk pricing behavior and owner resistance on MEG port calls. | Insurers, P&I and war-risk underwriters, legal and claims teams. |
| Export programs add demand pressure on the same lane |
Linked strength to increased Middle East cargo bookings and noted state shipper Bahri provisionally booked multiple VLCCs for March loading.
Higher ME liftings
March stems
|
More stems chasing a limited number of prompt ships pushes competition into fewer fixtures and higher clearing levels. | Rate spikes and schedule stress increase, and inefficient positioning can amplify equipment imbalance in adjacent basins. | March program lineups and the number of cargoes fixed per day. | National oil companies, traders, large refiners in China and North Asia. |
| Tightness is structural, not just a one-day squeeze |
Baltic Exchange weekly data showed TD3C rising strongly across February, with earlier-week assessments far below current levels.
Feb climb
Persistent firmness
|
Concentrated spot fleet control, low scrapping, and the shadow fleet absorbing hulls away from the fully compliant market. | Compliant tonnage becomes more expensive and less elastic during shocks, raising disruption sensitivity. | Spot list depth and time-to-fix, especially for high-spec vessels. | Fleet operators, compliance teams, financiers, freight derivatives desks. |
How fast this moved: February TD3C ladder in four snapshots
Baltic Exchange assessments show a rapid, compounding climb. This is helpful because it separates a slow tightening from a sudden risk-driven repricing.
TD3C ladder (selected reference points)
Quick voyage cost lens for MEG to China at extreme daily earnings
Enter a daily earnings level and a voyage duration to size the total freight spend and a rough $/bbl freight load for a 2.0 million bbl VLCC parcel.
With TD3C at extreme levels, the MEG to China lane can flip quickly between “pay up to secure” and “delay stems” behavior, keeping fixture timing and prompt availability as the first real-world stress points while U.S.–Iran risk remains in the price.
We welcome your feedback, suggestions, corrections, and ideas for enhancements. Please click here to get in touch.