The war in the Middle East has increased global oil shipping costs approximately sevenfold over the past year.
According to Goldman Sachs, freight rates will continue to rise due to geopolitical risks and logistical disruptions.
The average cost of transporting oil has risen from $3 to $20 per barrel. Risks associated with the Strait of Hormuz have contributed $7 to the increase, while higher fuel costs and ship-to-ship transfers have each added $4.
"High freight costs pose an upside risk to Brent crude prices. More intensive attacks on vessels, security barriers around energy infrastructure, and a sustained geopolitical risk premium have also been identified as factors that could affect prices. Our baseline forecast is for Brent crude prices to fall to $90 per barrel by the end of the year," the bank said.
It was noted that rising delivered oil prices could reduce overall oil demand from refineries. Refineries may also adjust existing trade routes by turning to suppliers located closer to their facilities.
The analysts emphasized that if supply shortages in the Middle East persist under current conditions, the factors driving up oil transportation costs are likely to remain in place. Approximately one-sixth of tankers in the Persian Gulf and the Gulf of Oman are used daily for ship-to-ship oil transfers.
The US-Iran war, followed by attacks on vessels in and around the Gulf, has thrown the global shipping industry into turmoil. Oil flows through the Strait of Hormuz initially declined sharply, but shipments have partially recovered as vessels transiting the disputed waterway transfer their cargoes to larger tankers.
Image: Amirhosein Khorgooi/ISNA via AP