Of the roughly $20 a barrel it now costs, on average, to move crude oil around the world, about $7 is a war risk premium charged for crossing the Strait of Hormuz. That single component is more than double the entire average freight rate of a year ago, which stood at $3 a barrel, according to a Goldman Sachs report summarized by ANI.
The increase started in the very large crude carrier segment and on Middle Eastern routes, ANI reported, and then spread to every major crude trading route. The longest voyages were hit hardest.
Key numbers
- $20 a barrel average global crude freight rate, up from $3 a barrel a year earlier
- $7 a barrel war risk premium for crossing the Strait of Hormuz, the largest single component
- $111.51 a barrel Brent crude at the time of ANI's report, after crossing $110 this week
- One-sixth of tankers in the Persian Gulf and the Gulf of Oman used each day for ship-to-ship transfers, AzerNews reported
Where the $20 comes from
The report broke the $20 a barrel year-on-year increase into five parts, ANI reported:
- $7 war risk premium for crossing the Strait of Hormuz
- $4 ship-to-ship transfers outside the Persian Gulf
- $4 higher maritime fuel costs
- $3 inefficient tanker allocation and more vessel diversions
- $2 restrictions on the Iranian tanker fleet
War risk and ship-to-ship transfers together account for more than half the rise. A ship-to-ship transfer is cargo moved from one tanker to another at sea, often onto a larger vessel outside the Gulf, which adds a step and a cost to every barrel that takes that route.
Asia's refiners sit at the end of the longest voyages
Most crude benchmarks quote the oil itself, not the cost of moving it. That is why a freight spike shows up in refining economics before it shows up in a headline crude price.
Refiners that buy from distant suppliers, Asian refiners above all, pay the voyage. ANI reported that they either pass the cost to consumers or accept thinner refining margins, and that passing it on is harder where fuel prices are regulated or where alternatives such as electric vehicles in China are widely used.
In plain words: the price a refinery actually pays is the crude plus the freight. When the freight part jumps, a cargo loaded far away becomes dearer than the same grade loaded nearby, even though the quoted crude price has not changed. That is why buyers start looking at who is closest rather than who is cheapest on paper.
What the two reports confirm, and what they do not
Both reports I read trace back to the same Goldman Sachs research note, so this is one set of figures reported twice, not two independent counts. Neither gives the exact date of the freight data.
AzerNews reported that oil flows through the Strait of Hormuz fell sharply at first and have partly recovered, with vessels transferring cargoes to larger tankers. ANI also cited a second crude benchmark trading around $99.31 a barrel without naming it. The scale of the disruption to tanker traffic is not independently confirmed in either report.