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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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 freight rates for oil transport remain very high, which could lead to a review of the Brent oil price projections upward, as stated in the Goldman Sachs Analysis Note.
Goldman Sachs Bank said that the average freight price of global crude oil is still seven times higher than it was a year ago, and it is unlikely that it will decline sharply as the war continues in the region.
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