Oil shipping rates have climbed to records as a shortage of supertankers grips global energy markets, driven by disruptions stemming from the Iran war. Chartering a very large crude carrier — a VLCC — for a voyage originating in the Persian Gulf and passing through the Strait of Hormuz topped $1 million a day earlier this month, maritime-intelligence firm Windward reported, according to The Wall Street Journal. At that rate, shipping alone adds roughly $26 to the cost of each barrel — nearly one-quarter of what the oil itself fetches on the open market.
After drone strikes knocked out Saudi Arabia’s bypass pipeline earlier this month, crude that would otherwise have avoided the strait flooded back onto an already overtaxed tanker fleet. Longer voyages and shuttle operations around the strait are tying up vessels, reducing the number available for hire, according to the Wall Street Journal.
The crunch is beginning to squeeze refiners. Record shipping costs are compressing their margins, and slower oil deliveries could keep fuel prices elevated even if global crude prices fall, according to the Wall Street Journal.
Tanker operators were already cautious about the strait well before the latest pipeline disruption. As shipping companies explained following a U.S.-Iran peace framework announced in June, operators were not prepared to resume normal transit even after a provisional deal to halt hostilities was reached. Jotaro Tamura, CEO of Mitsui O.S.K. Lines, said at the time that a resumption of tanker traffic could still be weeks away for many in the industry. “What will have to come in place is not just a simple agreement between the relevant countries, but it has to be material and translated into the real situations in the Strait of Hormuz, so that shipping lines can make themselves comfortable to go through,” Tamura told the Financial Times.
The shipping industry association BIMCO warned members that the strait remained dangerous, citing uncleared mines as the primary hazard. Norway’s shipowners’ association also raised concerns about how transit would be governed and how much of the shipping lane had been mined.
Before the conflict began, the strait served as the conduit for close to 20% of global seaborne oil and liquefied natural gas flows. Conflicts in Iran and Ukraine have together curbed oil flows from both Russia and the Persian Gulf region, shrinking the global supply pool and pushing prices higher.
Iran said it struck an oil tanker attempting to pass through the Strait of Hormuz last Thursday night.
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