Hormuz war risk pushes crude shipping costs sevenfold, squeezes refiners' margins: Goldman Sachs
- Goldman Sachs reported global oil freight rates surged sevenfold to $20 per barrel from $3 last year, as the Iran war and Hormuz crisis created a shipping crisis unlikely to end soon.
- War-Related risks in the Strait of Hormuz drive a $7 per barrel premium, while higher fuel costs and ship-to-ship transfers in the Gulf of Oman add $4 each to freight expenses.
- Supertanker rates topped $1.4 million per day on the Gulf to East Asia trip in early October, a record high, as inefficient tanker allocation tied up vessels in lengthy voyages.
- Asian refiners face tighter profit margins or must pass higher costs to consumers, while producers in distant markets may need to offer steeper discounts to maintain demand.
- Goldman analysts expect freight rates to remain elevated, posing an upside risk to their $90 per barrel Brent crude price forecast at the end of this year.
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Despite improved crude oil supplies from West Asia, India doesn't seem to be immediately reaping the benefits of cheaper oil. The biggest reason for this is rising transportation costs. While freight charges for crude oil were around $3 per barrel a year ago, they have now exceeded $20. This is putting pressure on the profits of Indian oil companies. Will this costly transportation also impact petrol and diesel prices?
Oil Futures For 2027 Have Jumped Almost 20%. Traders Believe Relief Could Take Longer Than Expected.
The U.S. Energy Information Administration has raised its oil price forecasts, adding to concerns about borrowing costs, consumer spending and the outlook for interest rates.
Although the oil market has never been fully global, the rise in transportation costs has led to a level of fragmentation that was previously unimaginable, writes Bloomberg. The price of a barrel of crude oil ranges between $70 and $150 depending on the region, so instead of the previous price differences of a few dollars, there are now differences of up to $50-80.
Hormuz war risk pushes crude shipping costs sevenfold, squeezes refiners' margins: Goldman Sachs
Global crude oil freight rates are rising due to war-related risks in the Strait of Hormuz and increased ship-to-ship transfers. Goldman Sachs reports that shipping costs are significantly higher than they were a year ago. Asian refiners are particularly pressured, facing potential profit margin reductions as they may pass costs to consumers. The increased freight costs could lead to lower refined fuel output and rising global fuel prices.
Hormuz War Risk Pushes Crude Shipping Costs Sevenfold, Squeezes Refiners’ Margins: Goldman Sachs
Get latest articles and stories on Business at LatestLY. War-related risks in the Strait of Hormuz and an increase in ship-to-ship transfers account for more than half of the USD 20 per barrel year-on-year rise in global crude oil freight rates, according to a report by Goldman Sachs (GS). Business News | Hormuz War Risk Pushes Crude Shipping Costs Sevenfold, Squeezes Refiners’ Margins: Goldman Sachs.
The oil market's 2027 relief hopes are fading fast
Data: FactSet; Chart: Courtenay Brown/AxiosTraders are betting that oil prices will remain elevated for longer than they anticipated just weeks ago, threatening to prolong the inflationary pressures that businesses and consumers have weathered for months.Why it matters: Oil inventories have helped cushion the blow from disrupted Middle Eastern supplies, but much of that buffer has been depleted since the war began.The possibility of sustained pr…
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