Oil prices fell slightly on Tuesday after Iran and Israel agreed to halt their exchange of strikes, but beneath the surface calm, the crude market is navigating a web of conflicting forces: a fragile ceasefire in the Gulf, record tanker orders, softening demand signals, and a long-term consumption outlook that refuses to fade.
Crude oil futures backed off from early heights but gained slightly on Monday, with WTI for July delivery going up 0.8% at $91.30 per barrel and Brent for August gaining 1.2% to $94.25, after Iran and Israel announced a halt to mutual attacks following an appeal from US President Donald Trump, writes eToro analyst for Romania, Bogdan Maioreanu
The ceasefire snapped two consecutive losing sessions, offering relief to a market rattled by the prolonged closure of the Strait of Hormuz – the chokepoint through which roughly a fifth of global seaborne crude normally flows. The price continued its down move at the beginning of Tuesday with Brent futures losing another 1.3%, and WTI futures reaching below $90 per barrel.
Yet the relief may be temporary. Yemen’s Houthis declared a ban on Israel-linked ships in the Red Sea, adding fresh pressure on energy corridors. OPEC+ approved its fourth consecutive output increase in four months, but most members most likely cannot meet existing quotas due to the Hormuz disruption or, in Russia’s case, Ukrainian drone strikes on infrastructure. Saudi Arabia cut its official selling price to Asian buyers for a second straight month giving a signal that physical demand is softening.
Despite this, an extraordinary bet is being placed in the shipping industry. According to Clarkson Research cited by Bloomberg, 262 supertankers — VLCC (Very Large Crude Carrier) capable of hauling 2 million barrels each — are currently on order at shipyards worldwide, surpassing the previous record set in October 2008. That orderbook represents over a quarter of the existing fleet, the highest share since 2011.
There are several reasons behind this increase. Daily rates for oil tankers have doubled compared to pre-conflict levels, the combined market capitalization of the fifteen largest publicly traded tanker companies has at times exceeded $60 billion—roughly double the level at the start of the year—and prices for second-hand VLCCs are hovering around $115 million, a high not seen since 2008. Bolstered by war-driven profits, shipowners are doing what they did before at the peak of the cycle: they are ordering more ships.
The problem is that fundamentals are already shifting. Analysts are noting the market has digested the oil supply shock well, with some vessels already quietly transiting Hormuz under bilateral deals between Gulf producers and Asian buyers. World’s top oil tanker owners warn that a US–Iran deal to reopen the Strait of Hormuz could turn today’s record profits into a sharp crash in charter rates.
But there is also a long-term perspective. According to the IEA global oil consumption will continue to increase through 2050. Under the current policies scenario, demand for oil is forecasted to rise to 113 million barrels per day by 2050, mainly due to its increased use in emerging markets and developing economies for road transport, petrochemical feedstocks, and aviation. And all this oil will have to be transported somehow. The tanker orders are trying to fill this need, but some tanker fleet owners have learned to move cautiously in a world under intense geopolitical stress. Notably, in just a few months the world has moved from the low oil prices of “drill, baby drill” to extreme volatility, with spikes reaching over $120 per barrel due to the Iran war, while long term the industry faces challenges from zero-emissions policies and renewable energy.
