Middle East Conflict Reroutes Global Tanker Fleets

Soaring fuel prices stemming from the conflict in the Middle East are compelling oil traders to undertake longer and less conventional voyages. This is resulting in cargo shipments following routes that would typically be economically unviable.

Diesel Shipments to Australia

Consider the STI Solace, a 250-meter-long tanker currently traveling past West Africa carrying diesel. According to data from Energy Aspects and Signal Ocean, the vessel loaded its cargo off the UK in late March and is now approximately one-third of the way through a journey exceeding 12,000 miles to Australia.

This shipment is notable because Europe generally imports diesel rather than exporting it. However, while Europe’s diesel benchmark has increased since the conflict began, prices in Asia have risen even more sharply, making a transglobal shipment worthwhile. “Everything about this market is wild,” said Philip Jones-Lux, a senior oil analyst at Sparta Commodities. “Europe is still short of diesel, but the situation in Asia is so much more acute that prices there are pulling barrels halfway around the world.”

Global Supply Chain Disruptions

The war in the Middle East is significantly disrupting global oil supply chains, reducing the availability of millions of barrels of crude oil and refined fuels like diesel. These disruptions are a result of both the closure of the Strait of Hormuz and decreased refinery processing rates in certain regions. The International Energy Agency has described this as the largest supply shock on record.

This situation has created a global competition for fuel, with traders actively seeking to secure supplies. March data already reflects the rapid market adjustments following the conflict’s onset in late February. The longer the Strait of Hormuz remains closed, the more intense this competition is expected to become.

Impact on Specific Regions

Traders have cautioned that Europe faces potential diesel shortages in the coming weeks. Australia has been particularly affected, experiencing panic buying – especially in rural areas – which has increased demand and led to fuel shortages at some service stations. The Australian government has urged conservation, attributing the shortages to hoarding rather than fundamental supply issues.

Increased Shipments from the Gulf Coast and West Coast

The STI Solace is not the only vessel heading to Australia. Multiple tankers – including the Largo Eagle, CL Zhaoge, and Hansa Sealancer – recently loaded refined products on the Gulf Coast, transited the Panama Canal, and are now en route to Australia, according to Vortexa and Bloomberg News ship-tracking data. Several additional vessels from the West Coast are either currently traveling or preparing to sail.

These ships are carrying a variety of refined fuels, including gasoline and diesel. If all vessels complete their journeys to Australia, March will see the largest exports on this route since at least 2015, according to Vortexa data.

Long-Haul Shipments to Asia

Parts of Asia are also receiving unusually long-haul shipments as prices surge above those in other regions. The Clearocean Marauder is sailing from the US West Coast to Singapore with diesel, a route not used for such cargoes since late 2024, according to Kpler data. The Metro Mistral is heading to Pakistan after loading gasoline in Europe, and European March exports of the fuel to Pakistan are projected to be the highest for any month since 2023, according to Vortexa.

These vessels join others that have altered course in the Atlantic, diverting away from Europe and toward Africa, as part of a broader realignment of the global oil market due to the ongoing conflict. “Lack of exports via the Strait of Hormuz and run cuts in Asia are keeping diesel prices in the region relatively stronger versus those in Europe, pulling cargoes away from them,” said Natalia Losada, an analyst at Energy Aspects.