Moving a barrel of Middle East crude to Asia used to cost pocket change. Now it can cost $10.
TotalEnergies CEO Patrick Pouyanné says a VLCC run through Hormuz now costs around $20M in freight and insurance, that's 4x or 5x the old rate.
That extra cost is pure war risk.
Gulf producers are selling crude at $50-60 while Brent stays above $90, enough to keep barrels moving despite the risk.
Refined products cannot make the same math work, which is why product tankers have largely stopped.
The conflict, rather than shutting down the Strait, has simply rewritten who collects the rent and turned transportation itself into a major line item in the price of oil.
Source: Oil Price, Bloomberg
TotalEnergies CEO Patrick Pouyanné says a VLCC run through Hormuz now costs around $20M in freight and insurance, that's 4x or 5x the old rate.
That extra cost is pure war risk.
Gulf producers are selling crude at $50-60 while Brent stays above $90, enough to keep barrels moving despite the risk.
Refined products cannot make the same math work, which is why product tankers have largely stopped.
The conflict, rather than shutting down the Strait, has simply rewritten who collects the rent and turned transportation itself into a major line item in the price of oil.
Source: Oil Price, Bloomberg
