Gulf Oil Exports Recover As Tanker Costs Keep Prices High

Oil exports from the Persian Gulf have recovered, but high tanker costs and shipping disruptions continue to put pressure on global energy markets. Gulf oil exports, excluding Iran, exceeded 81% of prewar levels in September. However, freight rates for very large crude carriers travelling from the Persian Gulf to China approached $250 per metric ton, adding to the cost of delivering oil to international buyers. The gap between recovering Gulf oil exports and expensive transportation remains a challenge for Gulf producers and their customers.

Gulf oil exports recover as shipping costs rise

Saudi Arabia led the recovery in Gulf oil exports despite continued threats to energy infrastructure and commercial shipping. However, the return of export volumes has not brought a similar improvement in transportation efficiency.

Tanker rates for shipments from the Persian Gulf to China recently approached $250 per metric ton, equivalent to around $35 per barrel. These rates were more than 20 times their average over the previous decade, according to the assessment.

The increase reflects disruptions to the Strait of Hormuz, a major route for global energy shipments. Restrictions and security concerns have forced the industry to use alternative ways to move crude oil to international markets.

One change has been the increased transfer of crude between vessels at sea or at other transfer points. More than 1 million barrels per day of Gulf crude exports were transferred between vessels in September, accounting for about 7.5% of regional flows. Such transfers were virtually absent before the conflict.

These arrangements have helped maintain deliveries, but they require additional vessels, equipment, and handling. The added steps raise costs and can limit how quickly crude reaches buyers.

For Gulf oil producers, high freight charges can make exports less competitive against supplies from other regions. Producers may need to adjust prices to retain customers, while buyers must account for higher transport costs when comparing crude grades and suppliers.

Higher freight costs pressure Gulf producers and Asian refiners

Asian refiners face particular pressure because many rely on crude imports from the Middle East. When shipping costs rise, the price of crude delivered to refineries can increase even if export volumes recover.

Refiners must then decide whether to absorb the extra expense or pass it on through higher prices for petrol, diesel, and other petroleum products. If product prices do not rise enough to cover the added costs, refining margins can narrow.

The effects can spread beyond the oil industry. Diesel is widely used in freight transport, agriculture, and manufacturing, while jet fuel is essential to commercial aviation. Higher fuel supply costs can increase operating expenses for companies across these sectors.

Gulf producers also face differences in how transport costs affect their export markets. Meanwhile, US oil producers may see changes in demand for alternative crude supplies, export opportunities, and regional price differences.

Tanker operators and maritime service providers may earn more from higher freight rates. However, security threats, insurance expenses, and operational delays can also raise their costs and risks.

The recovery in Gulf oil exports remains an important development for energy markets, but restoring supply alone may not bring prices down. More efficient shipping routes, greater tanker availability, and lower freight rates will be needed to reduce the cost of delivering crude.

For businesses across the Gulf, the cost of moving oil will remain a key factor in export competitiveness, refinery margins, and fuel prices. Tanker rates, cargo deliveries, and shipping conditions around the Strait of Hormuz will help show whether the recovery in exports can translate into more stable energy costs.