The rise in oil prices on world markets is showing no sign of stopping. Growing security concerns in the Middle East and rising tanker freight rates are putting additional pressure on the global energy market. It is important to understand that a key factor is the risk that oil may not reach buyers on time, while transportation costs continue to rise significantly.
The shortage of oil tankers has become a significant cost driver. As the crisis in the Persian Gulf forces shipping companies to review existing routes, demand for large vessels has increased dramatically. This pressure is particularly noticeable in the supertanker market, which is capable of carrying more than two million barrels of crude oil per voyage.
According to market estimates, around 50 such vessels are currently being used as floating oil storage facilities in the Persian Gulf, reducing the number of tankers available to transport crude to international buyers. The cost of a single supertanker voyage from the United States to China has reportedly reached $80 million. At a cargo capacity of approximately two million barrels, this translates into about $40 per barrel in transportation costs alone, on top of the price of the crude itself.
Thus, these expenses are changing the economics of international oil trade. Suppliers are increasingly having to offer discounts to compensate buyers for the higher cost of shipping. Saudi Arabia, for instance, has cut prices for Asian customers by $5-7 per barrel.
However, the reductions have not been sufficient to offset the increase in transportation expenses, leaving buyers exposed to higher overall procurement costs. In January 2025, supertanker freight rates surged after the United States expanded sanctions against Russia’s oil industry, prompting traders to rush to secure vessels to transport crude from alternative suppliers to China and India. According to Lloyd’s List Intelligence, 35 percent of the 669 tankers in the so-called shadow fleet involved in transporting Russian, Venezuelan and Iranian oil had been sanctioned by the United States, the United Kingdom or the European Union.
Freight rates on the Middle East-China route rose by 39 percent, while rates on some routes from Russia more than doubled. Demand for Very Large Crude Carriers (VLCCs), which can transport more than two million barrels of oil per voyage, increased sharply as Chinese and Indian buyers stepped up efforts to secure crude from alternative sources. Another factor driving oil prices sharply higher is the repeated attacks on tankers in the Strait of Hormuz, as well as strikes targeting critical oil pipelines and energy infrastructure.
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