A remarkable phenomenon was playing out in the waters on either side of the Strait of Hormuz on Monday, as dozens of tankers queued up in holding positions, unable to proceed with their voyages in either direction. The queue of stranded vessels, visible on marine tracking systems used by shipping professionals and energy market analysts, became one of the most striking visual representations of the scale of the disruption facing global energy supply chains as a result of the Middle East conflict.
The tankers caught in the queue include some of the largest vessels in the world’s merchant fleet. Very large crude carriers, capable of transporting two million barrels of oil each, sat waiting with full cargoes destined for refineries in Asia and Europe that are counting on their arrival. LNG carriers with their distinctive spherical tank domes visible on satellite imagery waited for a security situation that would allow them to proceed safely. Smaller tankers carrying refined petroleum products and petrochemicals added to the growing flotilla of stranded commercial vessels.
The economics of stranded tankers are deeply unfavourable for all parties. Tanker owners earn money only when their vessels are moving and delivering cargo. A tanker sitting in a holding position earns nothing and continues to accumulate operating costs. The cost of crew wages, fuel for the vessel’s own operations, and port or anchorage fees mounts daily for every vessel stuck in the queue. Shipowners and their customers, who have typically chartered vessels on contracts that do not contemplate extended delays of this nature, face complex legal and commercial disputes about who bears these costs.
For the refineries and energy buyers waiting for cargoes at the other end of the tanker queue, the delays create their own challenges. Refineries are designed to operate as continuous processes, with a steady inflow of crude and a steady outflow of refined products. When crude deliveries are delayed or suspended, refineries must either draw down inventory and risk running short, or reduce their throughput and face higher unit costs. Either option creates operational and commercial challenges that compound the direct cost impact of higher crude prices.
The resolution of the tanker queue depends entirely on the restoration of safe navigation in the Strait of Hormuz. Until ships can transit safely and obtain affordable insurance for the voyage, the queue will continue to grow. Every day of delay adds to the accumulated cost of the disruption, increases the urgency of the supply shortfall at destination ports, and deepens the already severe stress on global energy supply chains. The tanker queue is, in miniature, a visible symbol of the enormous economic cost that geopolitical conflict can inflict on the complex global systems through which energy reaches consumers.