Total SA is considering legal action against the Baltic Exchange, following a similar lawsuit already filed by Mercuria. These legal disputes are now threatening to fracture the close-knit world of oil shipping.

The effective blockade of the Strait of Hormuz has created chaos for the benchmark indices and derivative contracts used by the shipping industry to hedge against fluctuations in global tanker freight rates. Industry executives warn that the resulting commercial disputes could persist for "years."

The most prominent case is the lawsuit filed by Swiss trader Mercuria against the Baltic Exchange in the High Court in London on April 30. According to informed sources, Totsa, the oil trading arm of Total SA, is also considering legal action over the exchange's decisions. The exchange is responsible for assessing and publishing freight rates that serve as the pricing basis for many shipping contracts.

The impact of the conflict involving Iran has rippled through shipping and energy markets. Disruptions to Strait traffic have led to a surge of cancellations or delays for numerous oil cargoes, triggering a sharp increase in litigation between oil buyers and sellers.

The non-delivery of a batch of Middle Eastern oil, due to its chain reaction through a series of trading contracts between suppliers and end-users, could lead to multiple lawsuits.

In its legal claim, Mercuria alleges that the Baltic Exchange "improperly determined" a key freight benchmark that oil traders use to hedge freight risk.

According to a copy of the claim, Mercuria states it has suffered losses amounting to "hundreds of millions of dollars."

In the tight-knit shipping industry—where deals are often done over the phone and business relationships span decades—this lawsuit is akin to a bombshell.

"The shipping industry has some unwritten rules, and some of those are being challenged," said a shipping executive. "What are those rules? You don't sue an exchange. It will damage relationships."

This move has also exposed the opaque manner in which the 282-year-old Baltic Exchange sets shipping benchmarks, prompting oil trading and shipping executives to voice concerns about the potential for market manipulation.

Industry experts point out that the Baltic Exchange's rules contain rigid provisions that prevented it from making adjustments.

In contrast, oil price reporting agency S&P Global Platts promptly adjusted its methodology for assessing physical Dubai crude after the conflict erupted, excluding crude grades shipped from within the Gulf.

While shipowners typically benefit from high prices in this benchmark, trading houses that own or charter vessels and use the benchmark for hedging often face losses when prices spike suddenly.

The Baltic Exchange, owned by Singapore Exchange Group, stated that it considers Mercuria's claim "without merit" and will defend it in court. "The Baltic Exchange produces its benchmarks in accordance with established and robust governance frameworks, methodologies, and oversight processes," the exchange said.

Total SA and Mercuria declined to comment.

Lawyers indicate that the commercial disputes stemming from the Strait of Hormuz disruptions are likely to continue long after the conflict in the Middle East ends.

"This will lead to all sorts of significant disputes for months after the conflict ends," said Rowan Chandrasekera, a partner and head of Middle East business at law firm Stewarts. "The losses have been and will continue to be enormous."