Route Cost Projections
Updated 2026-05-24 · Confidence 75% · Valid until 2026-05-25
Executive summary
Shipping costs are projected to remain elevated over the next 90 days due to the ongoing Strait of Hormuz crisis. While negotiations offer a glimmer of hope, Iran's stance suggests a prolonged disruption. Fuel costs, driven by crude oil prices, and significantly increased tanker freight rates will be the primary cost drivers.
Route cost projections
Persian Gulf to Rotterdam
Origin: Ras Tanura → Destination: Rotterdam. Premium: +160%. Alternative: Cape of Good Hope. Primary cost driver: VLCC tanker freight rates and alternative route distance.
- 30-day projected cost: 6.3
- 60-day projected cost: 6.1
Persian Gulf to Shanghai
Origin: Jebel Ali → Destination: Shanghai. Premium: +190%. Alternative: Cape of Good Hope. Primary cost driver: VLCC tanker freight rates and alternative route distance.
- 30-day projected cost: 5.6
- 60-day projected cost: 5.4
Global shipping metrics
- Average tanker rate premium: +94%
- Average delay: 15 days
- War-risk insurance multiplier: 4×
- Bunker fuel cost change: 5.5%
Cost reduction triggers
- Successful US-Iran peace deal leading to full reopening of Strait of Hormuz — probability 30%, potential cost reduction 50%
- Significant de-escalation of geopolitical tensions in the Middle East — probability 40%, potential cost reduction 20%
- Sustained decrease in global crude oil prices — probability 50%, potential cost reduction 10%
Methodology
Bottom-up cost modeling incorporating fuel surcharges, insurance premiums, war risk premiums, port congestion delays, and alternative route distance penalties.
Analyst note
The Strait of Hormuz crisis remains the dominant factor influencing maritime logistics costs. While negotiations are ongoing, Iran's insistence on retaining control suggests a protracted resolution, meaning alternative routes and associated higher costs will persist. The current high VLCC tanker freight rates, up 94%, are a direct consequence of this disruption, forcing vessels to take longer, more expensive routes. Crude oil prices, though showing some volatility, are expected to remain elevated, contributing to bunker fuel costs. We project a gradual, slight decrease in costs over 90 days, assuming no further escalation and some progress in negotiations, but a return to pre-crisis levels is unlikely within this timeframe. War risk insurance premiums will continue to be a significant burden.
Frequently asked questions
- How much does shipping oil from the Persian Gulf cost now?
- Average tanker rate premiums are currently +94% above pre-crisis, with average delays of 15 days. War risk insurance has increased by 4×.
- Why are tanker rates so high?
- Elevated due to war-risk insurance premiums (up to 10× normal), rerouting via longer alternative passages, and vessel scarcity as ships avoid the Strait of Hormuz. Bunker fuel costs have also risen significantly.
- What alternative shipping routes are available?
- Key alternatives include routing via the Cape of Good Hope (adds 10-15 days), the Saudi East-West Pipeline to Yanbu, or the UAE Habshan-Fujairah Pipeline. Each carries cost and capacity penalties.
- Will shipping costs come down in 2026?
- Costs will remain elevated until the Strait of Hormuz situation resolves. Key triggers include diplomatic breakthrough, military de-escalation, and alternative-infrastructure expansion.
- What is a VLCC tanker rate premium?
- A VLCC (Very Large Crude Carrier) rate premium is the additional cost above normal charter rates due to elevated risk: war-risk insurance, crew hazard pay, and rerouting fuel costs.
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