31JUL

IEA: Gulf-Asia freight tops $37 a barrel

3 min read

09:44UTC

The IEA says moving Gulf crude to Asia now costs over five times the pre-war rate, while Kpler shows Middle East shipments back above pre-war levels.

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Key takeaway

Gulf oil still reaches buyers, but freight to Asia now costs over five times its pre-war rate.

The International Energy Agency (IEA) said on Wednesday 21 October that shipping crude from The Gulf to Asia cost more than $37 a barrel by mid-October, over five times the pre-war rate⁠¹. That is about 23 US cents on every litre of crude before it is refined. A supertanker carrying 2 million barrels now pays more than $74m in freight per cargo, against under $15m before the war. Supertanker owners were already booking record earnings in September.

Brent Crude, the global oil benchmark, traded at $112.27 a barrel on Thursday 22 October, about 3.2% above Tuesday's settlement and above Tuesday's five-month intraday high of $111.99, the Associated Press reported⁠². It had settled at $109.55 on Monday 19 October, then $108.79 on Tuesday, Reuters reported⁠³. West Texas Intermediate, the US benchmark, closed at $103.66 on Monday, its highest since 15 September⁠⁴.

Kpler, a ship-tracking data firm, put Middle East oil shipments above 24 million barrels a day in the week to 18 October, against a pre-war average of 23.3 million, the Wall Street Journal reported. Through Hormuz itself, flows run at about 82% of pre-war, so close to a fifth of the strait's old traffic has not returned. Pipelines now carry about 40% of the region's crude exports around the strait, against 17% before the war, which still leaves about 60% passing through Hormuz⁠⁵.

The ship-to-ship transfers that keep volume whole happen in The Gulf of Oman, outside the strait; the Revolutionary Guards say they hit transfers inside The Persian Gulf, and have not claimed any off Oman. The Group of Seven (G7) release of up to 100 million barrels from government stockpiles adds oil on land and does nothing for freight.

Deep Analysis

In plain English

Brent Crude is the main world price for oil. When it rises, petrol, diesel and heating fuel usually cost more. Oil from The Gulf still reaches buyers, mostly in Asia. But tanker owners now charge much more to carry it, because of attacks on ships and higher insurance costs. That extra cost is added to the price buyers pay.

Deep Analysis

Root Causes

Freight costs rise for three reasons at once: longer voyages around blocked routes, war-risk insurance priced per voyage, and fewer owners willing to send ships into The Gulf. Each adds cost without removing a barrel.

Pipelines carry about 40% of the region's crude exports, against 17% before the war, which keeps volumes up. But pipeline capacity is fixed, and about 60% of exports still pass through Hormuz.

What could happen next?

Consequence
Asian refiners may shift some purchases away from Gulf crude towards Atlantic Basin grades while freight stays high.
Opportunity
Pipelines that bypass Hormuz gain value, which may support new investment in export routes to the Red Sea and Gulf of Oman.

Source Landscape

This story draws on mixed-leaning sources from United States

United States×4

LeftRight

Primary parallel: On 25 September 2019 the US Treasury sanctioned units of COSCO, the Chinese shipping group, for carrying Iranian oil. Very large crude carrier rates briefly topped $200,000 a day in October 2019 as charterers shunned risky tonnage, even though oil supply barely changed.

Counter-parallel: From late 2023 Houthi attacks pushed many ships away from the Red Sea and around the Cape of Good Hope, lifting freight and journey times. Brent still averaged about $80 a barrel in 2024, because the extra cost fell on shipping and buyers absorbed it without a price spike.

A freight cost above $37 a barrel falls mainly on Asian buyers, who take most Gulf crude. Refiners in China, India, Japan and South Korea face a wider gap between Gulf crude delivered to them and Atlantic Basin crude, which may shift some purchases towards West Africa and the Americas.

Structurally, the war rewards owners of tankers willing to work The Gulf and pipelines that bypass the strait. Saudi Arabia's East-West line and the UAE's Habshan-Fujairah line gain value with every attack.

Consensus view: The International Energy Agency puts Gulf-to-Asia freight at five times the pre-war level, while Kpler puts Middle East shipments above pre-war volumes. Read together, the shock sits in the cost of moving oil, not in its quantity.

Counter-view: The IEA also counts pipelines carrying about 40% of the region's crude exports, against 17% before the war. On that reading, the East-West pipeline and Red Sea terminals are what keep volumes whole, and freight will fall once routes settle.

Key tension: Whether high freight is a temporary premium that fades as routes stabilise, or a lasting cost that Asian refiners will pass on to consumers.

First Reported In

Update #182 · Iran says it mined Hormuz and hit 7 ships

CBS News· 22 Oct 2026

Read original →

Causes and effects

Caused by

Supertanker hire passes $1.2m a day

Gulf-to-Asia freight rose past $37 a barrel after September's record supertanker earnings.

Occurred 25 Sept 2026

Read story →

IRGC says it hit 4 oil transfer ships

Brent rose to $112.27 on the day the IRGC claimed seven ship hits.

Occurred 22 Oct 2026

Read story →

This Event

IEA: Gulf-Asia freight tops $37 a barrel

The war now taxes Gulf oil through freight costs rather than by cutting the barrels that reach buyers.

Different Perspectives

Cross-border power traders

The France-Germany day-ahead spread flipped from a EUR 17.20 German premium on 1 August to a EUR 4.15 French premium on 3 August, the same day French curtailment peaked. They cannot yet attribute the flip to curtailment alone, since a like-for-like overnight comparison shows French nuclear output rising while wind fell and demand returned on the weekday step.

EDF

River-cooling limits took 7.6 GW, 12 per cent of its fleet, offline on 3 August, the highest curtailment since the heatwave began, with an easing forecast to 4.3 GW on 4 August and 3 GW after. It manages the cut as a recurring seasonal constraint, expecting it to lift with river temperature, not repair.

Gasunie

TTF, the Dutch hub it operates, drifted to roughly EUR 55 to 58 per MWh across the window, staying inside its recent range through both the German spark reversal and the French curtailment. It reads a flat hub price as evidence that neither event this window carried enough weight to move the fuel leg on its own.

German gas-fired generators

Record German solar of 18,761 MW on 2 August pushed the clean spark spread to minus 18.48 EUR/MWh, a loss-making day, before it returned to plus 16.20 on 3 August. They now price dispatch against post-solar residual load rather than wind alone, since the sign flipped inside 48 hours on unchanged fuel and carbon costs.

European Commission (DG Energy)

Its implementing-measures register logged transposition notices from only Portugal and Slovakia against Wednesday's Article 94 deadline for Directive (EU) 2024/1788, with 25 states silent. It expects the register to fill only gradually, since filing routinely lags legislating and any infringement track against non-notifying states runs on a slower clock than the deadline itself.

Spain's LNG terminal operators

Spain's 9,145 GWh terminal inventory is the largest single stock in the EU LNG network, an option value that can reroute cargoes wherever the winter strip pays best rather than a cavern gas obligation tied to a fixed date. That flexibility matters more as Germany's cavern shortfall pushes more of the winter security question onto import infrastructure.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.