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 3×.

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.

Route Cost Projections

Updated 2026-07-08 · Confidence 85% · Valid until 2026-07-09

Executive summary

The closure of the Strait of Hormuz has dramatically increased shipping costs, particularly for oil and gas routes originating from the Persian Gulf. VLCC tanker freight rates have surged by 94%, and this trend is expected to continue due to rerouting and heightened risk. Fuel costs, while showing some volatility, are also contributing to the overall increase.

Route cost projections

Persian Gulf to Rotterdam (Crude Oil)

Origin: Ras Tanura → Destination: Rotterdam. Premium: +132%. Alternative: Cape of Good Hope. Primary cost driver: Rerouting via Cape of Good Hope, increased VLCC rates, and war risk insurance..

30-day projected cost: 6.5
60-day projected cost: 7.2

Persian Gulf to Shanghai (Crude Oil)

Origin: Jebel Ali → Destination: Shanghai. Premium: +127.8%. Alternative: Cape of Good Hope. Primary cost driver: Rerouting via Cape of Good Hope/Suez Canal (if viable for some vessels), increased VLCC rates, and war risk insurance..

30-day projected cost: 4.6
60-day projected cost: 5.1

US Gulf Coast to Rotterdam (LNG)

Origin: Sabine Pass → Destination: Rotterdam. Premium: +26.7%. Alternative: N/A. Primary cost driver: Increased demand for LNG tankers due to global energy shifts and some minor rerouting impacts..

30-day projected cost: 2
60-day projected cost: 2.1

Global shipping metrics

Average tanker rate premium: +94%
Average delay: 15 days
War-risk insurance multiplier: 3×
Bunker fuel cost change: 2.6%

Cost reduction triggers

Reopening of the Strait of Hormuz — probability 10%, potential cost reduction 40%
Significant de-escalation of geopolitical tensions in the Middle East — probability 15%, potential cost reduction 25%
Global crude oil prices decrease by more than 10% — probability 30%, potential cost reduction 5%

Methodology

Bottom-up cost modeling incorporating fuel surcharges, insurance premiums, war risk premiums, port congestion delays, and alternative route distance penalties.

Analyst note

The closure of the Strait of Hormuz is the dominant factor driving maritime logistics costs, particularly for crude oil and related products. The 94% surge in VLCC tanker freight rates is a direct consequence of the need for longer routes and the increased risk premium. While LNG prices have seen a decline, the overall cost of transporting LNG is still impacted by the general increase in tanker demand and insurance. The geopolitical situation remains highly volatile, as indicated by the recent critical and high-level events. Without a resolution to the Strait of Hormuz closure, we anticipate a continued upward trend in shipping costs over the next 90 days, with potential for further spikes if tensions escalate. Companies should factor in significant surcharges and extended lead times for all shipments originating from or transiting through the broader Middle East region.

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 3×.
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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