$100 Million Tanker Dispute Raises Stakes in Mercuria’s Baltic Exchange Lawsuit

TD3C is a benchmark oil-tanker rate. It reflects the assessed cost of sending a supertanker from Saudi Arabia's Ras Tanura to China. The index matters because it gives shipping contracts a common reference price instead of requiring every deal to negotiate a completely separate rate.

Brokers provide assessments of the freight cost and risk for the route. Those assessments become the published TD3C rate. The index can then be written into charter agreements, including deals where one vessel is leased at a fixed price and leased back at a floating price linked to TD3C.

Its importance extends beyond one voyage. The article says TD3C supports contracts between tanker owners and customers, plus billions of dollars in derivatives. That is why the dispute over whether publication should have continued during the Iran war could affect many companies and financial agreements.

Mercuria is asking the London court to decide whether the Baltic Exchange breached its obligations by continuing to publish TD3C during the Iran war. The disputed period runs from early March to July 3, when oil traffic through the Strait of Hormuz was nearly stopped after Tehran targeted shipping.

Mercuria's position is that the benchmark should have been suspended because the route was severely disrupted. The Baltic Exchange argues that brokers could still assess the freight risk and put a price on the route. The court must therefore consider whether continued publication was valid under those conditions.

Mercuria changed its requested outcome after the case began. It now seeks only a declaration that publication should not have continued. Earlier, it sought to make the published values ineffective and have the index suspended retrospectively.

Hunter Chairman Morten Astrup said the company had more than $100 million in total accrued charter income, losses, and interest tied to Mercuria's reduced payments. Hunter says those payments left Mercuria in breach of contract while arrears accumulated.

The specific vessel is DHT Puma. Mercuria leased it to Hunter for $52,000 a day, then leased it back at a floating rate linked to TD3C. Hunter benefited as the benchmark rose, but Mercuria disputed the benchmark's continued publication. Hunter separately reported an unnamed counterparty owing $67.8 million at the end of September.

The exposure is much broader than Hunter's claim. TD3C supports other contracts between tanker owners and customers and billions of dollars in derivatives. A ruling could therefore affect a large network of agreements whose payments or values depend on the disputed index.

The Strait of Hormuz links the Persian Gulf with the rest of the world, and oil shipments through it nearly stopped during the Iran war. Tehran targeted shipping in the waterway, creating a severe disruption to the route normally used for Persian Gulf oil movements.

Firms still moved cargoes through the danger zone under fire from rockets and drones. The article says that the resulting freight risk was reflected in the cost of leasing crude-carrying supertankers. As vessels continued shuttling cargoes, the price of securing their use climbed sharply.

Rates eventually reached record highs of well over $1 million a day. The disruption also drove the dispute over TD3C: Mercuria argued that such extraordinary conditions meant the benchmark should have been suspended, while the Baltic Exchange said brokers could still assess a price for the risk.

The Baltic Exchange plays the central publishing role. It takes broker assessments and publishes shipping rates, including TD3C. Brokers estimate the cost and risk of moving a supertanker on the specified route, even when direct traffic is badly disrupted.

Tanker owners provide vessels, while charterers hire them for periods under fixed or floating terms. Commodity traders such as Mercuria arrange and reuse those charters, sometimes hiring vessels onward when they see a commercial opportunity. In the example described, Mercuria took DHT Puma on charter, leased it to Hunter, and then leased it back.

The benchmark connects these participants. Hunter's floating payment depended on TD3C, while its payment for the vessel was fixed. The same index also supports other tanker contracts and derivatives. That makes the Baltic Exchange's publication decision important far beyond a single vessel or dispute.

A shipping benchmark can continue when actual traffic is scarce if brokers can still assess the price of freight risk. The Baltic Exchange argued that this remained possible after oil shipments through Hormuz were severely disrupted during the Iran war.

For TD3C, brokers assessed the cost of sending a supertanker from Saudi Arabia's Ras Tanura to China. The article does not describe a separate replacement market or data source. Instead, it identifies broker assessments as the information used to put a price on the route and its risks.

This method is the heart of the legal dispute. Mercuria says the disruption made continued publication improper and argues that TD3C should have been suspended. The Baltic Exchange says the assessments remained usable. The ruling will address whether that judgment was acceptable during the March-to-July 3 period.

A fixed-rate time charter sets a daily vessel payment for an agreed period. A floating-rate charter links the payment to a changing benchmark, such as TD3C. This lets one party lock in revenue or cost while the other takes more exposure to market movements.

DHT Puma illustrates the mechanism. Mercuria leased the tanker to Hunter at a fixed $52,000 a day. Hunter then leased it back to Mercuria at a floating rate linked to TD3C. When TD3C climbed, Hunter's income increased while its fixed vessel cost did not rise at the same pace.

That difference created a large margin for Hunter and a growing payment obligation for Mercuria. Hunter reported an average second-quarter time-charter margin of $401,172 a day. Mercuria reduced payments and challenged the index, while Hunter said arrears and related losses continued to build.