China’s shipyards secure wave of oil tanker orders as Iran war drives demand

China’s shipyards are emerging as beneficiaries from the US-Israeli war on Iran, securing new orders as crude transport bottlenecks worsen and global demand for large oil tankers rises.

With the United States and Iran effectively blockading the Strait of Hormuz – a chokepoint that handles about a quarter of the world’s seaborne oil – shipping companies are racing to expand capacity, particularly in very large crude carriers (VLCCs) capable of transporting about 2 million barrels of oil per voyage.

The flurry of orders comes amid mounting pressure on global shipping. The strait has been largely blocked for eight weeks, sending crude oil prices to historic highs. Tankers are taking longer routes to avoid risky journeys through the Persian Gulf, exacerbating already tight fleets caused by ageing vessels and further straining supply.

But the disruption is opening new opportunities for Chinese shipbuilders, which are benefiting from strong capacity, lower costs and shorter delivery times. At least two Swiss firms and one Singapore-based company have placed VLCC orders with Chinese shipyards in recent weeks.

Switzerland’s Advantage Tankers, which had a long-standing reliance on South Korean shipyards, has placed an order in China for two 307,000-deadweight-tonne VLCCs. The vessels are scheduled for delivery in the second quarter of 2028 and the third quarter of 2029, respectively, the industry journal China Ship Survey reported last Thursday, though pricing was not disclosed.

Meanwhile, Geneva-based Mercuria Energy Group, one of the world’s leading independent commodity traders, has signed shipbuilding contracts in China worth nearly US$650 million. The order includes up to four VLCCs and two LR2 product tankers, with deliveries expected by 2029, according to the same journal, which is affiliated with the China Classification Society, a state-backed shipping body.

Singapore-based Yangzijiang Maritime Development, backed by Chinese shipbuilding tycoon Ren Yuanlin, has ordered eight VLCCs – its first venture into the large-tanker segment – with deliveries planned between 2028 and 2030, company filings showed.

Existing projects are also benefiting. Switzerland’s Advantage Tankers already had a 319,000-deadweight-tonne VLCC, the Advantage Visual, under construction at a Jiangsu province shipyard, with delivery expected in the fourth quarter of this year.

The vessel, acquired from commodities trader Trafigura for about US$119 million, is now valued at about US$152 million, according to China Ship Survey.

South China Morning Post