Quietly Smiling Amid War Fears... "Freight Rates Soar 408%" as Ships Become Power [Weekend Money]

Freight Rates Surge as Strait of Hormuz Blockade Drags On

Transport Vessels Emerge as Strategic National Assets

Long-Term Boom Expected for Shipbuilding Sector

Tensions are escalating as the war between the United States and Iran drags on and oil prices surge once again. Amid widespread anxiety, there is one sector that is thriving: shipbuilding. Analysts say the industry is a direct beneficiary of the restructuring of the global energy supply chain.

According to major foreign media reports on the 12th (local time), Iran's new Supreme Leader Mojtaba Khamenei declared a "bloody revenge." Hezbollah, the Iran-backed militant faction in Lebanon, launched its largest rocket attack on Israel since the start of the conflict. Clashes are also ongoing both within Iran and in the Gulf region. Iran continues to attack U.S. military bases in Israel, the United Arab Emirates (UAE), and Saudi Arabia with missiles and drones. The Israeli military has also announced plans to conduct large-scale airstrikes against infrastructure in Tehran, the capital of Iran.

If the Blockade of the Strait of Hormuz Persists, the World's Economic Artery Will Harden

The Strait of Hormuz, an artery of the global economy, remains blocked. U.S. President Donald Trump sought to reassure markets by promising U.S. Navy protection and coverage of insurance costs for ships, but concerns have only intensified. In just the past two days, at least six ships have been attacked in the Gulf region, including two oil tankers struck in Iraqi waters.

The blockade of the Strait of Hormuz is expected to be prolonged. The volume of oil and cargo ships passing through has dropped by about 70-80%, and over 150 vessels are reportedly waiting outside the strait. Foreign media have expressed concern that the world's energy artery is effectively clogged.

On the 12th (local time) at the ICE Futures Exchange, the May Brent crude futures closed at $100.46 per barrel (about 150,000 won), a sharp 9.2% jump from the previous session. This marks the first time since August 2022—approximately three years and seven months—that Brent crude has closed above $100 per barrel.

At the New York Mercantile Exchange, April futures for West Texas Intermediate (WTI) crude oil also closed at $95.73 per barrel, a 9.7% increase from the previous session. Dubai crude prices have also exceeded $110 per barrel, nearly double the early-year low of $58. Given that about 20% of the world's crude oil passes through the Strait of Hormuz, prices are not expected to fall below $100 per barrel any time soon.

Tanker Rates Soar... Also Benefiting from Supply Chain Restructuring

On June 9 last year, a liquefied natural gas (LNG) carrier fully docked at the yard of Hanwha Ocean Okpo Shipyard in Geoje, Gyeongsangnam-do, continued construction work with its lights on. Photo by Kang Jinhyung

According to Shinhan Investment Corp., the tanker freight index reached $290,000 per day as of the 6th, up 408% from $57,000 at the beginning of the year. As shipping companies avoid voyages, the number of available vessels has decreased, leading to higher rates due to reduced supply. The cost surge has been further accelerated by the addition of war risk insurance. In particular, the Strait of Hormuz is difficult to bypass or substitute, causing ship turnaround rates to decline.

While oil-producing countries' production capacity and reserves are the most critical factors during peacetime, repeated geopolitical conflicts have made transportation infrastructure itself a strategic asset. Even with ample production capacity, if transportation is restricted, energy supply drops immediately and prices become volatile.

Unlike pipelines, maritime transport is directly exposed to military and geopolitical risks. As geopolitical tensions rise, longer supply chains have become unavoidable. This makes national transport capacity, maritime control, and the number of ships owned increasingly important.

The strategic value of energy transport vessels, especially very large crude carriers (VLCCs) and liquefied natural gas (LNG) carriers, has risen. Lee Donghyun, a research analyst at Shinhan Investment Corp., said, "Korean shipbuilders are expected to benefit from a shortage of vessel supply and additional earnings growth due to the stronger won-dollar exchange rate. In addition, increased orders for energy ships, momentum from cooperation on naval vessels with the United States and other countries, and secondary benefits from the U.S. containment of China will drive a long-term boom for the industry."

This content was produced with the assistance of AI translation services.