Oil tanker rates near $650,000 a day six months into Iran war

Six months after the United States and Israel attacked Iran, the conflict's toll on global energy markets has crystallized into staggering numbers: oil tanker earnings approaching $650,000 a day, gasoline prices up 38% for American drivers, and billions of dollars flowing into new infrastructure to bypass the crippled Strait of Hormuz.

Ships hauling cargoes from Saudi Arabia to China were earning a record $647,000 a day on Thursday, more than ten times the rate a year earlier, according to Baltic Exchange data cited by Bloomberg. Few shipowners are willing to risk passage through the strait, where at least 71 attacks on ships and 19 sailor deaths have been recorded since the war began on Feb. 28.bloomberg+1

A New Normal for Oil and Fuel

Brent crude has risen roughly 23% from pre-war levels to around $89 a barrel, though the increase has been smaller than many energy executives initially feared. The U.S. national average price of unleaded gasoline stands at $4.09 per gallon, up 38% since the start of the war, according to AAA. Diesel has climbed nearly 50% to $5.61 a gallon, with cascading effects on transportation costs and inflation.nytimes

The global economy has adapted more quickly than expected. Countries dependent on Middle Eastern oil cut back consumption, the Trump administration drew down strategic reserves, producers in the Americas pumped more, and China — typically the world's largest oil importer — slashed purchases.nytimes

Strait of Hormuz Remains Paralyzed

Traffic through the strait, which carried one-fifth of the world's oil before the war, has slowed to roughly a dozen ships per day from more than 100 previously, according to maritime data firm Kpler. A brief June agreement between Iran and the United States saw traffic resume for three days before collapsing. Iran has since imposed fees on ships transiting the waterway, which was previously free.nytimes

Admiral Brad Cooper, head of U.S. Central Command, said this week that American forces had cleared the mines Iran planted in the strait, but the passage remains dangerous.nytimes

Gulf Nations Pivot to New Infrastructure

The disruption is accelerating a wave of infrastructure investment across the Persian Gulf. Saudi Arabia has fast-tracked expansion of its crude pipeline to the western Red Sea coast, while the UAE is building a new oil pipeline that will double crude capacity to Fujairah when operational next year. Kuwait Petroleum Corp is in discussions with Saudi Arabia and the UAE to accommodate its oil shipments through their pipeline systems.reuters

"If two years ago sports was the big buzz thing, I think for the time being, next year or two, they're going to say ports, ports, ports," one industry source told Reuters of Saudi Arabia's priorities.reuters

The economic toll has been uneven. Qatar and Kuwait's economies are projected to shrink by just over 8% this year, while Saudi Arabia's will expand by only 1.4%, according to a Reuters poll. Turkey and Saudi Arabia aim to build a railway linking the two countries with Jordan and Syria within three to four years.reuters

"The recent Strait of Hormuz crisis has given us a very important lesson that these vulnerabilities are real… and they can happen anytime at any chokepoint," said Afaq Hussain, a former senior fellow at the Atlantic Council's Middle East Initiative.reuters