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HOUSTON\/LOS ANGELES, Oct 15: When the oil supertanker Esteem Explorer sails from the United States to Japan in late November, loaded with about 2 \u200bmillion barrels of crude, the journey will cost $81 million. The same journey would have cost $9.1 million last year, on average.<\/strong><\/p>\n The shipping cost translates into $40.50 per barrel, \u200cabout nine times last year\u2019s rate. While oil\u2019s soaring selling price worries consumers, the Esteem Explorer\u2019s expensive voyage illustrates how transport costs are further inflating the price. Refiners process oil into fuel to move food, retail goods and construction materials, and rising costs are stoking inflation in countries that depend on imports.<\/p>\n Every $10-per-barrel increase in shipping costs adds about 23 cents per gallon to gasoline, said Kenneth Medlock, a fellow in energy and resource \u200beconomics at the Houston-based Baker Institute for Public Policy. On that basis, the Esteem Explorer\u2019s shipping cost works out to at least 80 cents more per gallon of \u200bgasoline than last year, according to Reuters calculations.<\/p>\n \u201cIt\u2019s sort of like a slow-moving train. It doesn\u2019t all happen instantly \u2026 but the longer this \u2060drags on, the more sticky it becomes, which means you get more of a sustained impact at the grocery store, in the convenience store, at the mall,\u201d Medlock said. \u201cEverything gets more \u200bexpensive because that\u2019s how we move stuff around.\u201d<\/p>\n Freight rates account for more than 40% of the price of US oil, based on Wednesday\u2019s price around $95 per barrel, compared with 7% on \u200baverage in 2025, according to LSEG shipping and oil price data.<\/p>\n Countries reliant on imports \u2014 including India, the Philippines and Indonesia \u2014 bear the brunt of the soaring costs, Medlock said.<\/p>\n Record oil tanker rates are already squeezing Asian refiners\u2019 profits, the International Energy Agency said on Wednesday.<\/p>\n Refiners process oil into gasoline for cars, diesel for semi-trucks and farm equipment, and jet fuel for airplanes. Rates to move oil from the Strait of Hormuz and the Red Sea in the Middle East to Asia surged to a \u200brecord high around $34 per barrel this week, as shippers price in a risk premium for attacks on vessels. Fearing attack, ships are also sailing longer routes than before, tying up tankers longer.<\/p>\n Shippers moving Saudi oil \u200care using \u2060more vessels than before \u2014 transferring oil ship to ship \u2014 to reduce the risks for individual ships after attacks on Saudi Arabia\u2019s main pipeline increased exports via the Strait of Hormuz. That strategy has reduced ship availability, raising costs and increasing the time cargoes are on the water.<\/p>\n The resulting shortage of very large crude carriers such as the Esteem Explorer has lifted prices for smaller vessels. Freight rates have quadrupled since the Iran war began in February for Suezmax ships, which can carry up to 1 million barrels of oil, for a route between the US Gulf Coast \u200band Asia, and for Aframaxes, which carry up \u200bto 750,000 barrels, on the US \u2060Gulf Coast to Europe route, according to Signal Ocean.<\/p>\n While some shippers contract vessels for three to five years, many of them charter ships on the spot market about a month prior to loading. The long-term contracts, in which shippers and vessel owners lock in prices, could prove to \u200bbe bargains for the shippers if prices rise further.<\/p>\n Oil market upheaval has provided a windfall for tanker owners. They have recently earned \u200bas much as $1.3 million \u2060per ship per day for a round trip from the Persian Gulf through the Strait of Hormuz to Asia, said Georgios Sakellariou, a Signal Ocean freight analyst. That compared with earnings of $55,000 per ship per day on average in 2025.<\/p>\n \u201cIf you\u2019d have told me six weeks ago that we were seeing a million dollars per day, I wouldn\u2019t have believed you,\u201d said Michelle Wiese Bockmann, senior analyst \u2060at maritime intelligence \u200bfirm Windward.<\/p>\n This year may be the most profitable ever, said a person at a company that owns and \u200boperates tankers primarily in the Americas.<\/p>\n \u201cOur expectation is that as long as there is more crude oil demand than supply, tanker rates will remain strong. However, as soon as the crude oil market loosens, tanker rates will come off \u200bthe boil quickly,\u201d said Erik Broekhuizen, head of tanker research and consulting at ship broker Poten & Partners.<\/p>\n<\/div>\nOIL\u2019S ROLE IN THE ECONOMY<\/strong><\/h3>\n
Attacks on ships related to the US-Iran war and \u200bthe Russia-Ukraine war have boosted freight and insurance rates.<\/p>\n