Oil producers are paying sailors enormous bonuses to move crude through the dangerous Strait of Hormuz.
Some crew members are being offered as much as $25,000 for a single round trip into the Persian Gulf, according to The Wall Street Journal. The payments are part of an expanding system of so-called shuttle runs used to move oil through the Strait of Hormuz despite attacks on commercial vessels.
Under the system, tankers enter the Gulf, load crude and move it through Hormuz before transferring the cargo to other vessels outside the highest-risk area. Individual shuttle runs can reportedly cost Gulf producers as much as $40 million.
The expense has not stopped exports. Crude flows through Hormuz reached a seven-day average of 14.2 million barrels per day on Sept. 26, equivalent to almost 80% of pre-war levels, according to Kpler data.
However, getting those barrels to buyers has become a lot more expensive. Rates for very large crude carriers moving oil from the Middle East to Asia have recently exceeded $1.2 million per day, compared with around $30,000 in January. Freight that previously represented about 3% of the delivered cost of a barrel now accounts for roughly 27%.
Oil Prices Remain Above $100
Those logistical pressures are helping keep oil prices high despite the recovery in exports. Brent crude was trading around $102.67 per barrel on Monday, while US West Texas Intermediate was near $90.62. Brent is also still more than 40% above its pre-war level.
Prices have nevertheless faced some downward pressure as Gulf exports recover and G7 countries prepare to release 100 million barrels of crude and diesel from emergency reserves.
The market is also still vulnerable to new disruption. Attacks on tankers and energy infrastructure continue, while shipping companies must contend with higher insurance premiums, limited vessel availability and the growing cost of convincing crews to enter the region.
That means the oil market's problem is not simply whether producers have enough crude to sell, but how safely and cheaply they can get those barrels to customers. As long as the Strait of Hormuz remains dangerous, that logistical premium could continue supporting oil prices even as physical exports recover.
