Global oil shipping costs have surged to historic highs amid disruptions in the Middle East, increasing pressure on refiners and threatening to raise fuel prices for consumers, according to the International Energy Agency (IEA).
The cost of shipping crude oil from the Middle East Gulf to Asia on a very large crude carrier (VLCC) rose to more than $37 per barrel by mid-October 2026, over five times its level before the conflict began in February, the IEA said in its commentart titled, ‘The soaring cost of shipping is lifting the price of oil for consumers.’
IEA said soaring tanker freight rates amid Middle East disruptions are increasing oil supply costs and threatening higher fuel prices for consumers.
By mid-October 2026, shipping crude from the Middle East Gulf to Asia cost over $37 per barrel, more than five times pre-conflict levels.
Higher shipping costs have squeezed Asian refinery margins, threatening fuel supplies and pushing prices higher.
Disruptions around the Strait of Hormuz, the rerouting of trade flows and longer delivery times have reduced tanker availability and pushed freight rates higher. Drone attacks on Saudi Arabia’s East-West crude pipeline in September, alongside restrictions on shipping through the Bab el-Mandeb Strait, further tightened the market, although Saudi Arabia repaired and reopened the pipeline within days.
The impact has spread beyond large crude tankers to smaller vessels and refined oil products. In the third quarter of 2026, demand for Suezmax and Aframax tankers, measured by the volume of cargo transported and distance travelled, was around 20 per cent higher than a year earlier. By mid-October, shipping crude from West Africa to Europe on a Suezmax vessel cost more than $22 per barrel, over four times pre-conflict levels.
Freight rates for product tankers have also climbed as some vessels have shifted to carrying crude oil. Shipping oil products from the Middle East Gulf to Japan on LR1 tankers cost nearly $27 per barrel in mid-October, five times the pre-conflict level.
Asian refiners have been particularly affected because of their reliance on Middle Eastern crude. VLCC charter rates on the Middle East Gulf-to-Asia route exceeded $1.3 million a day by mid-October, while higher delivered crude costs pushed margins for Asian refiners processing Middle Eastern oil into negative territory in September.
Refiners are also facing higher costs on alternative routes. Shipping crude from the US Gulf Coast to Singapore cost around $33 per barrel by mid-October, while transport to Europe cost $24 per barrel, more than four times pre-conflict levels.
The IEA said refiners may have to absorb higher crude costs, switch to less suitable grades that could reduce product yields, or cut operating rates. Reduced refinery output could tighten supplies of diesel, kerosene and other oil products, adding further upward pressure on consumer prices.
Restoring oil production and fully reopening the Strait of Hormuz will be essential to easing market disruption, the agency said. However, high export volumes, efforts to rebuild depleted oil stocks and continued inefficiencies in shipping routes could keep tanker availability constrained and freight rates elevated even if security conditions improve.
Fibre2Fashion News Desk (CG)
