The global oil market faces a critical juncture as Eni CEO Claudio Descalzi warns that crude prices will break out of the current $80-$100 range by the first quarter of 2027 if the Middle East conflict continues. According to Il Sole 24 Ore newspaper, Descalzi stated that the release of stockpiles has helped keep crude prices largely within this range so far, but the strategy carries growing risks as global reserves are finite. The warning comes as oil prices ended the week with solid gains despite easing from midweek peaks, with Brent crude climbing above $75 before falling to $70 averages, close to pre-war trading levels. Every $5 increase in oil prices adds roughly $190 billion in annual costs to the global economy, with current Brent prices likely costing more than $70 billion to replace reserves drawn down to mitigate Iran war supply losses. Jonathan Barratt, Chief Investment Officer at ETO Markets, agrees that Brent crude could climb to $85-$87 per barrel if uncertainty around the Strait of Hormuz continues to disrupt oil market sentiment.
Spot freight rates in the key tanker segment have experienced dramatic increases, with spot freight rates averaging $137,000 per day in the June 2026 quarter, compared to $42,065 per day a year earlier, representing a 226% year-on-year increase. According to industry data from a leading Indian shipping company, this surge is attributed to the continued Middle East crisis and more than 20% of global VLCC fleet capacity being inoperational. However, recent developments show US chemical tanker freight rates assessed by ICIS were steady to lower this week as prices continue to face downward pressure on several trade lanes. The Middle East conflict has halted all shipments across the Strait of Hormuz and disrupted supplies from Qatar, the world's second-largest fuel seller. Iraq has reduced oil production by almost 1.5 million barrels per day, with cuts potentially reaching over 3 million bpd as the country runs out of storage space. According to Barratt, oil markets are watching tanker movements closely because any disruption to crude exports could tighten global supplies, with conflicting statements from the US and Iran making it difficult to determine whether shipping through the Strait of Hormuz has been affected.
Container shipping rates continue to experience upward pressure, with rates to the West Coast seen as high as $7,400/FEU (40-foot equivalent unit) and as high as almost $9,000/FEU to the East Coast. According to ICIS, rates for shipping containers from east Asia and China to the US continued to rise this week, although at a slightly slower pace. The main driver for rising container rates is early peak season demand as importers try to get ahead of anticipated tariffs. The US Trade Representative (USTR) started hearings this week as part of the process required to roll out new Section 301 tariffs before Section 122 tariffs expire on 24 July. Judah Levine, head of research at Freightos, noted that the current supply/demand situation led to successful implementation of 1 July general rate increases (GRIs) and peak season surcharges (PSSs) across the major east-west lanes, contributing to a total increase of more than $3,000/FEU on the transpacific trades since the end of May.
Indian shipping companies are well-positioned to capitalize on these favorable market conditions, with 70% of their total fleet capacity dedicated to the tanker segment. According to The Financial Express, Great Eastern Shipping reported consolidated revenue rising 23.5% year-on-year to ₹1,511 crore in Q4FY26, while consolidated net profit increased 187.6% year-on-year to ₹1,044.1 crore. The company maintains a Return on Equity (RoE) of 15.9% and trades at a consolidated P/E of 8.2 times. Shipping Corporation of India operates 58 vessels with 5.26 million dwt capacity and reported a Return on Equity of 15.5%. Both companies have reached 52-week highs, with GE Shipping trading at ₹1,422 and Shipping Corporation of India at ₹284.9.
The oil market crisis has accelerated calls for strategic supply diversification, with global oil stocks falling by an average 3.8 million barrels per day, accelerating to 4.6 million bpd in May due to Iran war disruptions. According to Eni's CEO Claudio Descalzi, countries should focus on producers in North and sub-Saharan Africa, Latin America and Southeast Asia, while reducing dependence on controlled maritime passages. The International Energy Agency (IEA) released 400 million barrels of oil in March to bring down prices amid the Iran crisis, with the IEA's maximum drawdown capability aiming to decrease safety margins in oil markets. Eni has limited Middle East exposure, while most of its upstream production is in Africa and Latin America, positioning it well for the anticipated shift in global energy supply chains. Barratt expects crude to remain supported until there is greater clarity on tanker movements through the Strait of Hormuz, while noting that we need tankers to go through and we need Iran to start pumping oil and getting that to the market, and that's what we're not seeing.
