Soaring Freight Costs and Security Fears Strangle Persian Gulf Oil Flow

PetroChina recently rejected six offers for a very large crude carrier to transport Basrah crude from Iraq, citing freight prices three times higher than pre-conflict levels. Executives report that while vessels are technically available, the combination of prohibitive costs and the absence of transit security makes the route unviable under current terms. An internal source noted that unless shipping companies and refiners agree on new risk-sharing clauses, the supply bottleneck will persist.

Indian Oil Corporation faced an even starker outcome, receiving zero bids for tankers to load Iraqi crude. The company ultimately declared force majeure on the cargo, highlighting the severity of the logistics crisis. Despite tentative diplomatic optimism regarding U.S.-Iran relations, major operators remain cautious. Jotaro Tamura, CEO of Mitsui OSK Lines, indicated that the industry will likely maintain its distance from the Strait of Hormuz for several weeks, if not months, until the regional environment stabilizes.