Crude oil transportation costs have surged to unprecedented levels, with very large crude carriers (VLCCs) earning more than $1.4 million per day on Persian Gulf-to-East Asia routes as the Iran war disrupts shipping patterns and leaves fewer vessels available across global markets.
Freight rates on the route climbed by about 40 percent in the first week of October, surpassing the previous record set in September when daily rates exceeded $1 million on voyages from the Persian Gulf to China, according to Bloomberg data cited by Oilprice.com.
The surge comes as tankers spend extended periods waiting for ship-to-ship transfers around the Gulf of Oman, where crude is being transferred outside the Strait of Hormuz. The prolonged operations are tying up vessels that would otherwise be available to transport oil between other major production and consumption centres.
The resulting shortage is spreading beyond the largest tankers to smaller Aframax and Suezmax vessels, as oil producers and buyers compete for alternative shipping capacity.
Vitol chief executive Russell Hardy described the transfers as highly inefficient during the Energy Intelligence Forum in London, warning that the disruption had moved beyond crude supply and refined-product availability to become a shipping crisis.
The pressure is also driving up the cost of transporting crude from the United States to Asia. Bloomberg reported that a supertanker offered for a U.S. Gulf Coast-to-Japan voyage carried a proposed total freight charge of $82 million, about 50 percent above the level three weeks earlier.
Separately, commodity trader Trafigura reportedly chartered a VLCC to transport crude from the U.S. Gulf Coast to China for $76 million, according to a source cited by CNBC. Before the war, comparable voyages typically cost between $7 million and $10 million.
At the reported $76 million freight charge, transportation alone works out to approximately $38 per barrel, illustrating how shipping expenses are adding substantially to the delivered cost of crude.
The disruption has created a shortage of available vessels in markets beyond the Middle East. High freight earnings are attracting tankers to Persian Gulf and Gulf of Oman routes, leaving fewer ships to serve other international oil trade lanes.
Fearnleys, a shipbroker, said regional crude exports from the Middle East had exceeded pre-war levels on several days in late September, even as shipping capacity remained constrained by the time required to move and transfer cargoes.
The pressure is also affecting smaller tankers. Aframax and Suezmax rates have risen as buyers and producers seek alternatives to the increasingly expensive and difficult-to-secure VLCC market.
The shipping squeeze is adding another layer of cost to an oil market already facing geopolitical supply risks. Higher freight charges increase the expense of delivering crude to refineries, potentially feeding into refined-product prices and raising costs for fuel buyers.
Argus analysts warned that freight premiums were adding tens of dollars per barrel to delivered crude costs, putting pressure on oil-trading margins and raising questions about whether buyers would continue accepting the higher prices.
The latest surge highlights how disruptions to shipping can tighten effective oil availability even when exports recover. With tankers tied up in lengthy transfer operations and fewer vessels available elsewhere, transportation capacity has become a major constraint on global crude trade.
Unless shipping patterns become more efficient and vessel availability improves, elevated freight costs could continue to add pressure to delivered crude and fuel prices.