Tanker costs add to oil price pressure

Well, let's start with the latest on energy and the cost of transporting crude oil across the world has surged, adding another layer of expense to an already expensive oil market. A supertanker carrying around 2 million barrels of crude from the United States to Japan is expected to cost $81 million for its voyage in late November. Last year, the same journey cost an average of $9.1 million. That translates into a shipping cost of $40.5 per barrel, around nine times last year's rate. Trade costs now account for more than 40% of the price of U.S. oil, compared with an average of just 7% in 2025. The surge reflects growing risk of shipping from the U.S.-Iran war and the Russia-Ukraine conflict as well, which have pushed up freight rates and insurance premiums. The impact extends well beyond the oil markets, as higher transportation costs can eventually feed into prices across the economy. Crude oil is refined into petrol, diesel and jet fuel, which powers cars, trucks, farm equipment and aircraft. When transporting crude becomes more expensive, refiners face higher costs, putting pressure on their profit margins and potentially raising fuel prices. According to reports, every $10 per barrel increase in shipping costs adds around 23% per gallon to gasoline prices. Based on that estimate, the supertanker's latest shipping costs translate into at least $0.80 more per gallon of gasoline compared with last year. The effects can spread gradually to groceries, retail goods and construction materials because fuel and transportation are an integral part of moving goods. Import-dependent economies including India, the Philippines and Indonesia are all particularly exposed to higher shipping costs. The International Energy Agency has also warned that record tanker rates are squeezing the profits of Asian refiners. The sharp increase in shipping costs is being driven by a combination of security risks, longer routes and a shortage of available tankers. Freight rates for moving oil from the Strait of Hormuz and the Red Sea to Asia have climbed around $34 per barrel. Some ships are taking longer routes to avoid danger, keeping vessels occupied for extended periods. Oil shippers are also increasing transferring cargo between vessels to reduce individual ships' exposure to attacks. But these operations tie up more tankers, further limiting availability and pushing up prices. Rates have quadrupled since the Iran war began in February for certain routes that are served by smaller tankers. The disruption has created a windfall for tanker owners. Earnings on some voyages from the Persian Gulf to Asia have reached as much as $1.3 million per ship per day. That's compared with an average of $55,000 in 2025. However, the outlook depends on the balance between oil supply and demand. Industry analysts expect tanker rates to remain elevated while crude markets are tight, but to decline quickly if supply conditions improve.