Gulf-to-Asia crude freight exceeds $37 a barrel as shipping routes shift

Shipping crude from the Middle East Gulf to Asia cost more than $37 a barrel by mid-October, over five times the level before the war, gCaptain reported, citing the International Energy Agency. Tanker rates set records in September and rose further into October as exporters relied on a more complex transport network amid escalating Iranian attacks in the Strait of Hormuz.

For a very large crude carrier carrying 2 million barrels, the reported rate puts freight costs above $74 million for one cargo, against less than $15 million before the conflict. Yet the rise in transport costs has not prevented a recovery in export volumes. According to The Wall Street Journal, citing Kpler vessel-tracking figures and quoted by gCaptain, Middle East oil shipments averaged more than 24 million barrels a day in the week ending 18 October, compared with a prewar average of 23.3 million.

The recovery rests on a combination of greater pipeline use, short tanker voyages through Hormuz and transfers between vessels offshore in the Gulf of Oman. Kpler figures cited in the report show that the share of regional crude exports avoiding Hormuz increased from about 17% before the war to 40% in September. Saudi Arabia and the United Arab Emirates have increased their use of pipelines serving export terminals outside the strait.

Tankers still passing through Hormuz often follow a route close to Oman’s coast under US military protection, then hand their cargoes to other vessels for onward delivery. Despite the broader export recovery, flows through the strait, including offshore transfers, remain at roughly 82% of prewar levels. The Wall Street Journal reported about 30 attacks on vessels so far in October, drawing on maritime security reports.

The risks have also increased the financial rewards available to some participants. Kpler estimates that traders can make an additional $20 a barrel from reselling Iraqi crude compared with before the war, while some seafarers are being offered sizeable hazard bonuses for the crossings. The figures underline the higher costs accompanying the recovery in oil shipments, with more elaborate routes keeping cargoes moving despite continued security threats.