Record tanker costs are reshaping the economics of crude shipments to Asia, pushing delivered prices toward $140 a barrel in China and forcing producers to reduce discounts or absorb more transport expense to keep cargoes moving. Freight from the Persian Gulf to China rose to about $33 a barrel by late September, compared with roughly $4 before the war, while deliveries to Japan and South Korea reached about $145 a barrel.
Saudi Aramco set the November official selling price for Arab Light at a $5-a-barrel discount to the Oman-Dubai benchmark. The reduction partly offsets an additional $10 to $15 a barrel needed to move cargoes outside the Strait of Hormuz, but Aramco still faces exposure to freight rates when barrels sold for future loading are delivered.
Alternative routes have also become more expensive. Freight from Saudi Arabia’s Yanbu port to China, previously about $6 to $7 a barrel after an initial surge, reached roughly $28 by mid-October after restrictions on Saudi cargoes through Bab el-Mandeb. Saudi loadings at Yanbu slowed to between 1. 6 million and 1. 8 million barrels a day, about half their March-to-July average, and more exports shifted through the Gulf.
The freight shock is redirecting Atlantic Basin crude toward India. Shipping Brazilian crude to China cost about $36 a barrel by mid-October, lifting delivered Tupi crude to roughly $140 and making Chinese buyers less willing to purchase it. For West African crude, Djeno traded at about a $10-a-barrel discount to ICE Brent, but freight to China cost around $34 a barrel—$9 more than the voyage to India. India’s imports from Angola were estimated to rise from 35,000 barrels a day in September to 315,000 in October, with additional cargoes from Gabon and Congo heading to India’s west coast.
Russia is facing the same squeeze on its Asian routes. Urals, previously assessed at an $8-a-barrel premium to Dated Brent, had moved to roughly flat against that benchmark as sellers adjusted for the higher delivery bill.
War-risk insurance and delays are adding to the cost. Premiums reached 7% to 8% of a vessel’s hull and machinery value, equivalent to about $4 to $5 a barrel in the cited market estimates, while demurrage on held Gulf cargoes reached $1 million a day. Chinese state buyers had already secured all November-loading Russian ESPO cargoes by early September, reflecting the value refiners are placing on predictable delivery as shipping routes remain disrupted.