Middle East War | How Iran’s Hormuz closure is raising global fuel and goods costs

Iran’s closure of the Strait of Hormuz trade route in the Middle East war is driving up the costs of shipping fuel and goods around the world, industry data shows. Prices have risen because of falling capacity, with ships staying put in the Gulf for fear of attack if they set sail. Other ships are taking long, costly alternative routes to avoid the strait — while the reduction of oil flows has raised the price of boats’ fuel.

“We’ve had to stop bookings… from and to the upper Gulf region because we can’t get the ships in nor out,” said Rolf Habben Jansen, chief executive of major container shipping line Hapag-Lloyd last week, estimating the war had driven up costs by “$40, 50 million per week”. “A big chunk of that is bunker fuel prices but also in categories like insurance or container storage and inland transportation we have seen costs go up, and we have six ships that we cannot use today, which reduces the available capacity,” he told a news conference.

Here are five data indicators of how the crisis is driving up shipping costs. The cost of chartering an oil tanker multiplied after US and Israeli forces started striking Iran on February 28, prompting retaliatory strikes across the region. For a big Suezmax-class crude carrier, the average “earnings” — a standard indirect indicator of charter costs — has more than tripled since February 26 to over $330,000 a day, according to maritime research group Clarksons.

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For liquefied natural gas carriers on a reference US to Japan route, the measure also tripled in that period to $90,000 a day. The overall cost of shipping oil shot up after the war broke out, said freight pricing specialist Peter Norfolk at Platts, part of S&P Global Energy. From $46 per metric tonne at the end of February, the cost of shipping crude from the Gulf to China on a giant VLCC-class tanker nearly tripled in a few days, then eased to stand at around $64 at the end of March, he told AFP on Monday. “Of course, in reality there is hardly any loading happening at the moment,” he noted.

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