Hormuz Tanker Transit & Freight Reroute Model

Chokepoint Controls

OPEN TRANSIT

Scenario Presets

Strait of Hormuz Status

Vessel Class & Cargo

Discharge Port Destination

Saudi Petroline + Fujairah Bypass 0% diverted Max physical capacity: ~6.5M bpd (East-West 5.0M bpd + Abu Dhabi 1.5M bpd)

Hull & Machinery War Risk Premium 0.02% Percentage of total vessel asset value (~$120M VLCC)

VLSFO Bunker Fuel Price ($/MT) $620/MT

Time Charter Equivalent (TCE Base Rate) $45,000/day

Voyage Route Distance

6,450 NM

Direct Persian Gulf corridor

Transit Time (One-Way)

19.5 Days

@ 13.8 knots steaming speed

Freight Cost Impact

$2.18 / bbl

Total: $4.36M per cargo

Strait Throughput Dislocation

0.0 M bpd

Full 20.8M bpd flowing

Corridor: Normal Transit

Vessels navigating standard outbound traffic separation scheme (TSS) at Ras Musandam.

Standard Hormuz TSS Route

Pipeline Bypass (Yanbu / Fujairah)

Cape of Good Hope / Long Voyage

Voyage Voyage Cost & Risk Breakdown VLCC Crude Cargo: 2,000,000 Barrels

Cost Component	Baseline Normal	Current Scenario	Variance / Delta
Time Charter Equivalent (TCE)	$877,500	$877,500	+$0
Bunker Fuel Expense (VLSFO)	$604,500	$604,500	+$0
War Risk Insurance (Hull & Machinery)	$24,000	$24,000	+$0
Canal & Chokepoint Tariffs	$0	$0	+$0
Total Voyage Freight Cost	$1,506,000	$1,506,000	+$0 / bbl

Model ready. Adjust scenario parameters or choose a preset to simulate disruptions. Model Version: 2026.9.2

Strategic Importance of the Strait of Hormuz Chokepoint

The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and Arabian Sea. At its narrowest point, the shipping channel consists of two 2-mile-wide navigation lanes separated by a 2-mile buffer zone. It accommodates approximately 20.5 to 21.0 million barrels per day (bpd) of petroleum liquids—equivalent to ~20% of global petroleum liquids consumption and more than a quarter of total global seaborne crude trade.

Major Exporters: Saudi Arabia, Iraq, UAE, Kuwait, Qatar (world's top LNG exporter), and Iran.
Bypass Infrastructure Limitations: The only operating overland pipelines bypassing Hormuz are Saudi Arabia's East-West Petroline to Yanbu on the Red Sea (capacity ~5.0M bpd) and Abu Dhabi's ADCOP pipeline to Fujairah on the Gulf of Oman (capacity ~1.5M bpd). Net bypass capacity leaves ~14M bpd stranded if the Strait is completely sealed.
War Risk Pricing Dynamics: Joint War Committee (JWC) listed areas mandate additional premiums. In contested environments, H&M war risk premiums routinely spike from 0.02% to over 2.5% of insured asset value, adding hundreds of thousands of dollars per voyage.

Methodology & Maritime Calculation Formulas

This workbench calculates voyage economics based on real BIMCO/Worldscale shipping metrics:

Distance ($D$ NM): Great-circle nautical miles calibrated from loading hubs (Ras Tanura / Ras Laffan / Yanbu / Fujairah) to major refining discharge ports.
Transit Days: $T = \frac{D}{24 \times V} + T_{\text{port}}$, where steaming speed $V \approx 13.5 - 14.5\text{ knots}$ plus 2.5 days for loading, discharge, and pilotage.
Bunker Fuel Consumption: Daily burn rate ($\sim 45\text{ MT/day}$ for VLCC at economic steaming) $\times \text{Days} \times \text{Bunker Price}$.
War Risk Insurance: $\text{Insured Asset Value} \times \text{Surcharge Rate} \times \text{Breach Duration Factor}$.
Per-Barrel Freight Surcharge: $\frac{\text{Total Voyage Cost}}{\text{Cargo Capacity (bbl)}}$.

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