Shipping costs in the Middle East surge, significantly widening global crude oil price spreads

⑴ Goldman Sachs pointed out that although the escalation of tanker attacks has occurred, Middle Eastern crude oil supply remains resilient. However, soaring shipping and insurance costs are clearly driving a significant divergence in regional crude oil prices. ⑵ Goldman Sachs estimates that the global average crude oil freight rate has risen to about $30 per barrel, compared to only about $4 a year ago, with freight rates on Middle Eastern routes climbing to about $35 per barrel. ⑶ The increase in freight and insurance costs for cargos passing through the Strait of Hormuz has also widened the price difference between crude oil grades from different loading locations. ⑷ According to Goldman Sachs data, the premium of Murban crude loaded at Fujairah, located outside the Strait, over Basrah crude loaded within the Persian Gulf, has increased from about $2 per barrel in February to about $43 per barrel. ⑸ This divergence reflects that the market is repricing transportation and geopolitical risks through price differentials, rather than simply reflecting supply disruptions. ⑹ Going forward, attention should be paid to whether Middle Eastern shipping costs can ease, as well as the impact of the price differential structure on refinery procurement and arbitrage flows.