Goldman Sachs: Global Oil Transportation Costs Increased Sevenfold

According to Goldman Sachs analysts, conflicts and logistical disruptions in the Middle East have driven up global oil transportation costs by about sevenfold over the past year, pushing the average freight expense for crude oil from $3 to over $20 per barrel.

According to a note published by Goldman Sachs analysts led by Yulia Zhestkova Grigsby, the war risk premium in the Strait of Hormuz played a $7 role in the cost increase, while rising fuel expenses and ship-to-ship transfers each contributed $4. The bank indicated that rising freight costs could create upward pressure on Brent crude oil prices.

The US-Iran war and vessel attacks around the Persian Gulf have disrupted global maritime trade. While shipments passing through the Strait of Hormuz have partially recovered through the transfer of cargoes to larger tankers, approximately one-sixth of the tankers in the Persian Gulf and the Gulf of Oman are used daily for ship-to-ship oil transfers.

Analysts project that the increase in delivered oil costs could reduce refineries' total crude oil demand and cause facilities to shift trade routes by turning to closer suppliers. Goldman Sachs' baseline forecast points to Brent crude falling to $90 per barrel by the end of the year.