By Anadolu Agency
October 6, 2026 7:36 amCrude oil transportation costs from the Arabian Gulf to China have surged more than fivefold since the start of the US-Iran conflict, eroding amid disruptions in the Strait of Hormuz, eroding the competitiveness of Gulf crude in Asia and increasing pressure on producers to offer deeper discounts.
According to data compiled by Anadolu from maritime freight data provider Baltic Exchange, freight rates for very large crude carriers (VLCCs) on the TD3C route from the Arabian Gulf to China stood at $45.42 per metric ton on Feb. 27, the last trading day before the conflict began, before reaching $229.76 per ton at the end of September.
The increase of around 406% has pushed transportation costs to more than five times their pre-conflict level.
With around 80% of crude oil and petroleum products passing through the Strait of Hormuz destined for Asia, and China remaining the world’s largest crude importer, the surge in TD3C freight rates has become increasingly significant for the competitiveness of Arabian Gulf crude in Asian markets.
The sharp increase also highlights how physical supply volumes are no longer the only factor shaping global oil markets, as the cost of moving crude from production centers to consuming markets becomes increasingly important.
– Hormuz transit carries 64% freight premium
The increase in tanker freight costs has also spilled over into routes that avoid the Strait of Hormuz.
On the TD34 route from the Gulf of Oman to China, freight rates rose from $36.78 per ton when the assessment was first published on March 26 to $140.02 at the end of September, an increase of about 3.8 times.
By the end of September, transportation costs on the TD3C route, which requires passage through the Strait of Hormuz, were around 64% higher than on TD34, which avoids the strait.
The gap highlights the additional cost imposed by the geopolitical and security risks associated with Hormuz transit.
– Record freight costs erode Saudi crude’s price advantage in Asia
The impact of record-high freight costs has extended beyond the tanker market, weighing on the competitiveness of Saudi crude in Asia.
Saudi Arabia unexpectedly cut its official selling prices for November, reducing the price of Arab Light crude by $3 per barrel from the previous month to $5 below the Oman/Dubai benchmark.
The discount was the widest for the grade since June 2020.
Saudi Arabia’s state oil company Saudi Aramco was also reported to be considering discounts of up to around $9 per barrel on some crude cargoes loaded offshore Oman to offset elevated freight costs caused by disruptions in the Strait of Hormuz and protect its market share in Asia.
The pricing moves underscore producers’ efforts to offset the competitive disadvantage created by higher shipping costs and preserve their position in the Asian market.
– Geopolitical risks feed into freight costs
Disruptions at critical chokepoints such as the Strait of Hormuz and Bab el-Mandeb have forced tankers onto longer alternative routes, driving up transportation costs, said Osama Rizvi, energy and economic analyst at international data company Primary Vision Network.
An aging tanker fleet, limited new vessel construction and the inability of ships operating in the shadow fleet to participate in the conventional market have further tightened the availability of tankers, according to Rizvi.
“The main factor driving the increase in freight rates is the cost of geopolitics,” Rizvi said.
“If the crisis continues and freight rates remain elevated, shipping costs will become one of the factors determining oil prices in the long term. This will affect not only oil but also other commodities transported by sea,” he added.
– Discount pressure grows on Arabian Gulf crude
Michael Ryan, freight analyst at Switzerland-based data provider Sparta, said current freight levels have risen enough to affect the competitiveness of Arabian Gulf crude in Asian markets.
Higher tanker rates are significantly increasing the delivered cost of crude into Asia, meaning producers may increasingly need to adjust their selling prices to remain competitive.
Referring to the sharp increase in freight rates, Ryan said, “The swing is not just margin compression, it will price some grades out of Asia unless sellers offer steep discounts on FOB, or free-on-board, prices.”
Elevated shipping costs could also encourage Asian buyers to turn to crude grades from the Atlantic Basin, increasing pressure on Arabian Gulf sellers to lower their crude prices, according to Ryan.
Ryan said persistently high freight costs could also influence crude benchmarks, although the impact would not necessarily appear directly in the outright Brent price.
Instead, the effect is more likely to emerge through differentials between individual crude grades and through the Exchange of Futures for Swaps (EFS), which reflects the relationship between Brent and Dubai pricing.
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