Hormuz Tanker Risks Drive Shipping Costs Higher

Oil tankers continue moving through the Strait of Hormuz despite attacks during the Persian Gulf conflict, with crews and shipowners facing higher risks, insurance costs, and record freight rates as global oil flows remain dependent on the strategic waterway.

According to the Financial Times, tanker captains can earn up to $100,000 a month for transiting Hormuz, plus a $50,000 bonus for each trip, compared with regular monthly pay of about $15,000.

The Financial Times reported that sailors can increase their earnings by four to six times their normal rates on Hormuz voyages. The higher payments are being used to keep vessels staffed despite continued security threats.

A source cited by the Financial Times said some crew members facing repeated attacks are "almost being viewed as mercenaries."

Since the Iran war began on February 28, at least 93 ships have been hit and 24 sailors have been killed, according to the International Maritime Organization. Shipowners are also paying war-risk insurance costs of 6% to 10% of a vessel's value, which can reach $20 million for a supertanker.

The crisis has also pushed shipping expenses sharply higher. Freight rates for cargoes crossing the Strait of Hormuz reached $1.3 million per day, compared with $20,000 to $50,000 per day last year, according to the Financial Times.

CNBC reported that a supertanker named The Alexandros was chartered for a Gulf Coast to China voyage at $76 million, compared with a pre-war rate of $7 million to $10 million. The ship was chartered by Trafigura and was expected to load around November 19.

The CNBC report said the voyage cost would equal about $38 per barrel of oil if the tanker carried 2 million barrels. The increase reflects a shortage of available tankers caused by the Middle East crisis.

Oil producers in the region have used a shuttle system in which tankers cross the Strait of Hormuz before transferring cargo to other ships in the Gulf of Oman for delivery to Asian buyers, according to CNBC. The system reduces exposure to attacks but requires more vessels to transport crude.