JPM Natasha Kaneva Oil Flash Note April comes twice

J P M O R G A N Global Markets Strategy 09 October 2026

Oil Flash Note April comes twice

October is beginning to look a lot like April. Delivered crude prices have returned Global Commodities Research to their spring highs, refinery margins are once again turning negative in Europe, Natasha Kaneva and the risk of refinery run cuts is rising. Yet the forces driving the market are ( fundamentally different. In April, the problem was a shortage of crude. In October, it is the cost of moving it. Lyuba Savinova ( The latest dislocation began in September, when Middle Eastern producers began moving more oil through the Strait of Hormuz. Flows jumped from around 7.5 mbd Artem Fakhretdinov ( in July and August to 12 mbd in September, drawing an increasing number of tankers into the region. By September, 766 of the global fleet of 923 very large JPMorgan Chase Bank NA crude carriers (VLCCs) were in active use, leaving remarkably little spare capacity to absorb additional demand, particularly as 124 vessels within that fleet were effectively unavailable due to the US blockade of Iranian oil.

The problem is not simply how many tankers are available, but how efficiently they can be used. More vessels are now tied up in ship-to-ship transfers, which can take up to 10 days, while others are taking longer routes to avoid higher-risk areas. Both extend voyage times, reducing the number of trips each tanker can complete. The arithmetic is straightforward: the longer each vessel spends moving cargo, the more vessels are needed to transport the same amount of oil.

Sanctions add another layer of complexity. Around 124 Iranian VLCCs, equivalent to roughly 13% of the global fleet, remain effectively unavailable to much of the international market because of US sanctions. Many are anchored or drifting in the Gulf or offshore locations near Sri Lanka and Malaysia, their physical presence offering little relief to the mainstream tanker market.

The result is a sharp increase in the number of vessels required to move essentially the same amount of crude. Compared with the 2025 average, transporting Middle Eastern crude (excluding Iran) now requires an additional 35 VLCCs, 13 Suezmaxes, and 10 Aframaxes (Tables 1-3). As the Middle East absorbs a growing share of the available fleet, other regions are left competing for increasingly scarce transportation capacity. In the rest of the world, for example, VLCC employment has fallen by 16 vessels.

Atlantic Basin producers are responding by moving crude on smaller vessels. A single VLCC cargo can be replaced by roughly two Suezmaxes or three Aframaxes, spreading the shortage across the tanker market (Table 4). Outside the Middle East, Aframax employment has risen by 141 vessels, up 23% relative to the 2025 average, while Suezmax employment has increased by 52 vessels, an 11% gain.

What began as a shortage of VLCC capacity in the Middle East has therefore become a much broader tightening across the global tanker fleet.

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Natasha Kaneva AC ( Artem Fakhretdinov ( Global Markets Strategy JPMORGAN Oil Flash Note JPMorgan Chase Bank NA 09 October 2026 Lyuba Savinova (

Freight rates have responded accordingly. Rates on key Middle Eastern crude routes and Atlantic deliveries doubled in September from levels that were already near all-time highs, even before the latest surge. The cost of shipping a VLCC cargo from the Middle East to China has surged to around $35 per barrel, compared with just $3/bbl in early 2026. Freight from the US Gulf Coast to China has reached $41/bbl, up from $6/bbl before the war (Figure 1).

In effect, buyers are now paying upwards of $30 per barrel simply to transport crude to its destination—an unusually large component of the delivered price, on top of already elevated crude costs. The impact on delivered prices is striking (Figure 2). For a buyer in China, the all-in-cost of a Middle Eastern barrel now stands at around $143/bbl, compared with $126/bbl for Brazilian crude and $131/bbl for US Gulf Coast supplies (Table 5).

These are levels last seen in early April, but the forces driving them are fundamentally different. Back then, Middle…