A growing number of product tankers, originally designed to carry fuels such as diesel and gasoline, are being repurposed to transport crude oil due to improved economic incentives resulting from the conflict in Iran. Data from the vessel tracking platform Signal Ocean shows that approximately 68 Long Range 2 (LR2) tankers have been converted for crude transportation so far this year, compared to only 49 such conversions throughout all of 2025. LR2 tankers are the largest vessel type built specifically for product transport, with capacity similar to that of Aframax crude tankers—the smallest class of crude carriers, capable of hauling up to 800,000 barrels of oil.
This shift began to emerge toward the end of last year. Increased demand for crude carriers, driven by the deployment of more floating storage units and consolidation in the tanker market, has pushed up freight rates for such vessels. The closure of the Strait of Hormuz has accelerated the trend, as crude buyers seek alternative sources, extending voyage distances for crude tankers while demand for product carriers remains weak.
Georgios Sakellariou, a chartering analyst at Signal Maritime, part of the same group as Signal Ocean, noted that a sharp decline in Persian Gulf crude production and refining capacity has rendered the main loading hubs for LR2 tankers largely unavailable. Referring to the wave of vessel conversions, he stated, "The scale of conversions is striking and has already reshaped the global tanker capacity landscape."
According to Signal data, around 296 LR2 tankers are currently engaged in crude oil transport, accounting for two-thirds of the global LR2 fleet—the highest proportion since records began in 2019. A key driver behind this shift is the widening gap in time-charter equivalent earnings between Aframax and LR2 tankers. In March, Aframax tankers saw significantly higher profitability compared to LR2 vessels, as crude buyers scrambled to secure supply and major refiners cut fuel exports.
Vessel tracking data highlights specific examples of this transition. Among the many converted ships, the LR2 tanker "Proteus Philippa" shipped diesel from the Middle East to Europe in February. Following the outbreak of conflict in the Middle East, the vessel arrived in Houston in early March to load West Texas Intermediate crude.
The influx of LR2 tankers into the Aframax market has tightened available capacity for product transport, raising freight rates for refined fuels and diminishing the economic advantage of further conversions. In recent weeks, the number of conversions has declined. Whether this trend will reverse remains to be seen. While converting a product tanker to carry crude is relatively straightforward, reversing the process is more time-consuming and costly.
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