Hormuz shuttle runs cost Gulf producers up to $20 a barrel before insurance

Divide the two ends of the shipbrokers' range and they agree: $30 million at $15 a barrel and $40 million at $20 a barrel both imply a cargo of 2 million barrels ^[19]. The quote is a whole-voyage cost spread over one full load, and it leaves out insurance ^[4]. The charter is the largest single piece, though the freight share of a shuttle run is not precisely known, according to The Wall Street Journal's reporting ^[15]. Who pays matters more than the size. The Journal reports that producers judged stranded oil to be worse economics than the freight bill plus a thinner margin ^[5]. The buyer's ship waits outside the strait for the transfer ^[2], so the war premium on the first leg comes out of what the seller nets. The sources do not show how much of it reaches delivered prices. Freight on the direct route points the same way. Clarksons Research puts the day rate for a supertanker from the Gulf to China at more than $1.2 million in late September, against about $231,400 on the eve of the war and less than $40,000 in early January ^[7]. The late-September rate is about 5.2 times the prewar one and more than 30 times January's ^[22][23]. The prewar rate was itself more than 5.7 times January's ^[25], so much of the risk premium was already in freight before the fighting began. Crews are the cheap input, or rather, cheap next to the voyage. A Shandong-based staffing company is offering up to $25,000 a round trip, which could be more than a year's wages for an oiler or cadet ^[9]. Against a $30 million to $40 million run, the bonus comes to 0.06% to 0.08% of the bill ^[20]. "Given the millions being made at the moment, that's absolutely nothing to the shipowners," said Richard Matthews, director of consulting and research at shipbroker E.A. Gibson ^[10]. "For many shipowners, the current market is generating revenues at levels rarely seen in the industry's recent history," said Dimitris Maniatis, chief executive of maritime risk company Marisks ^[11]. Hulls and insurance are harder to find. The core shuttle fleet grew from 30 vessels at the end of August to 39, a 30% rise, according to Claire Jungman of Vortexa, who said Saudi Arabia's share is rising fast ^[16][24]. Sinokor and Dynacom dominate the trade, but older tankers from the Venezuelan and Russian runs have joined ^[12], and getting insured can prove difficult ^[18]. Shipbrokers say an insured old tanker that becomes a total loss pays its owner full value, and that may beat scrapping it ^[17]. That owner weighs a sinking differently from the producer whose 2 million barrels are aboard ^[19]. Saudi Arabia's East-West pipeline is the first variable. Drone attacks shut it, and Aramco joined its regional peers in hiring shuttle tankers ^[3]. The line has been partially restored but runs below pre-attack capacity, and the September export surge is attributed partly to that outage ^[1]. A full repair would send Saudi barrels back around the strait. The attack count is the second: seven ships have been hit since Sept. 28, a few of them shuttle tankers, according to the U.K. Maritime Trade Operations ^[13]. Nine merchant vessels attacked near the strait in two weeks left two crew injured and one dead ^[14]. Each attack raises the insurance cost that the $15 to $20 figure leaves out. Buyers are the third. The shuttle exists because they stopped sending their own ships inside the Gulf ^[6]. I think the cost is real and the producers are carrying it now. Kpler's seven-day average of 18.3 million barrels a day on Sept. 30 sits about 1.7% above the prewar 18 million ^[8][21], and producers are paying up to $20 a barrel extra for that volume instead of leaving it in the ground ^[4][5].