Hormuz tanker traffic holds up as war risks drive shipping costs higher

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Hormuz tanker traffic holds up

Highlights

Crude exports through Hormuz average 11.1 million bpd in October, down 2% from September, despite 30 vessels attacked and rising security incidents.
Superyacht tanker rates for Gulf of Oman to Asia surge from $249,000/day in early September to $931,000/day in early October, lifting transport costs from $6.50 to $21 per barrel.
Brent crude climbs over 13% in October, trading above $117 a barrel as Gulf oil producers absorb freight costs and security risks increase in the Persian Gulf.

Wartime shipping model keeps oil moving

As reported by CNBC, oil tankers continue to move large crude volumes through Hormuz even after attacks on commercial ships in October reach their highest monthly level of the Iran war.

Within 24 hours of the U.S. and Israel going to war with Iran, Tehran launches attacks on commercial shipping in the strait in an effort to disrupt one of the world’s main crude supply routes. The campaign initially proves effective, with crude exports falling nearly 90% to 1.8 million barrels a day in March from 16 million bpd in February, according to Kpler data.

Flows rebound over the past eight months as the U.S. military provides protection for tankers crossing Hormuz, although Tehran intensifies attacks again in recent weeks. As of Oct. 27, at least 30 vessels, mostly oil tankers, are hit this month and at least 16 seafarers are injured, according to the International Maritime Organization, while confirmed incidents double from 15 in September.

Despite that escalation, crude exports through Hormuz average nearly 11.1 million bpd in October, about 2% below September levels, Kpler data shows. Daily volumes remain volatile, and flows for the week ended Wednesday fall to 7.3 million bpd, more than 40% below the prewar baseline.

Freight surge reshapes Gulf oil economics

Shipping companies adapt by using a shuttle system designed to lower risk and insurance costs. Tankers load crude at Persian Gulf ports, transit Hormuz with transponders switched off, and transfer cargoes to ships waiting in the Gulf of Oman for onward delivery to Asian refiners.

According to Mary Melton, senior tanker analyst at Braemar, the system helps push flows through Hormuz up more than 70% since July, but it is inefficient, operationally complex and expensive. It requires more ships, equipment and experienced crews, and about 20% of the global supertanker fleet is now tied up supporting these movements.

Tanker rates surge as a result. Hiring a supertanker for the Gulf of Oman to Asia route costs $249,000 a day in early September and rises to $931,000 a day by the first week of October, lifting transport costs to about $21 per barrel from $6.50 in September.

Crude prices also climb more than 13% this month as security conditions worsen in the Persian Gulf, with Brent trading above $117 a barrel on Friday. More Gulf producers are covering freight bills and using their own tankers to protect market share in Asia from the U.S., but the durability of the current system remains uncertain because shipowners still depend heavily on U.S. military air support to cross Hormuz safely.

In our earlier article on the conflict-driven surge in oil shipping costs, we explained how attacks and heightened risk premiums on routes such as the Strait of Hormuz and the Red Sea pushed freight to record levels and made transport a much larger share of the delivered oil price. We also noted that practices like ship-to-ship transfers and rerouting were tying up vessel capacity, boosting charter rates, and feeding through into higher fuel and consumer costs—while creating outsized earnings for tanker owners.

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