MID-SHIP Report: Dry Bulk Freight Market – March 5, 2026
March 5, 2026
Over the weekend we all woke to the news of yet more military action in the Mideast which sets the hard and pervasive tone for this market update. First and foremost, we want to express our support and our thoughts to all those in the shipping and trading communities directly affected by these actions including our own staff in Dubai who have been sheltering in place since retaliatory strikes started earlier this week. It is our hope that a quick resolution can be found allowing everyone in the region to get back to living life normally.
Given the last comment, the big question in the market driving many decisions right now is “how long will it take for the military actions to end”? Initial estimates from Washington indicated 4-5 weeks of direct action, but given the regional implications and breadth of actions, many others feel this could become a more prolonged state of reality for the markets for a while. It would be in everyone’s best interests for this to be resolved quickly.
Among the major direct impacts that the freight markets have faced since Saturday are the following:
-WTI oil pricing has risen to over USD 80 a barrel and this has driven up the prices for bunker fuels by more 30% so far.
-The Strait of Hormuz, through which more than 20% of the world’s oil is transported, is effectively closed to commercial shipping as Iranian retaliatory actions have targeted non-military targets in the region including commercial ships through the waterway, which Iran has claimed they control (though there are rumors several Chinese owned ships have been given permission to transit unaffected).
-War Risk Insurance coverage has been revoked for ships trading in the Arabian Gulf forcing ship owners to purchase new insurance at what is reported to be 4-5 times the cost of the insurance previously. War risk coverage in many cases is not being offered for vessels passing through the Strait of Hormuz.
-War Risk premiums have been assessed for all ships trading from Western Pakistan down to Somalia including the Red Sea.
-As also happened when the Ukrainian War started, a large number of ships are basically trapped in the Arabian Gulf (enroute to load or discharge) and, for the time being, will be temporized assets in vessel supply evaluations.
Much of these results can be clearly calculated into the markets and resulting pricing but there are a lot of factors that are making the glass ball more opaque. The Chinese government, the 3rd largest exporter of processed fuels, has announced a ban (temporary?) on fuel exports given the concerns about future oil supplies for their economy, It is reasonable to expect that all major markets dependent on imported energy needs will face the same or similar pressure and this, along with physical supply constraints, will likely keep fuel pricing rising over the coming days.
Going into this new round of extra market dynamics, many traders and shipping entities had found the freight market to be balanced but fragile. General supply of ships was solid but demand was spotty and many recent government initiatives had taken away the visibility of how normal trade flows would progress. This created a lot of volatility. What is for certain is that the actions in and around Iran will exacerbate that volatility in the next weeks. Because of this, many major ship owners have taken the position that they will not readily rate forward business and any pricing given will be for short reply time.
For many businesses operating in tight pricing dynamics, this is a problematic way of trying to move forward. It will likely slow down transactions being finalized and create concern on tight-margined business.
Trade into and out of the Mideast is basically temporized and this will greatly affect the aluminum, steel, fertilizer and petcoke markets (input and output) among others. We will need to see how replacement trades develop over the next few weeks to really assess how much of an impact this will have to vessel pricing as alternative sources are tapped. How will this play into already weak housing markets, particularly in China, and the economic impact prolonged higher fuel pricing will generate? That is a bigger picture it (as are many others) that will flesh out over the coming weeks. We sincerely hope it is weeks and not months before we see a practical resolution.
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