War impacts Gulf oil shipping costs
The escalation of tensions in the Gulf region and the closure of the Strait of Hormuz have highlighted the risks facing Gulf oil exports, especially with the Houthi group imposing a naval blockade on ships coming from Saudi Arabia and the continued closure of the strait due to the U.S.-Iranian conflict. These developments have led to increased transportation costs, as the insurance risk premium has risen to between 7.5% and 10%, compared to just 0.25% before the escalation. This has significantly raised shipping costs, with smuggling expenses to Asia exceeding an additional $5 million per cargo. Gulf countries have relied on alternative routes such as pipelines in the UAE and Saudi Arabia to avoid these dangers, but some of these routes have limited capacity, compounding the pressures on oil supplies and global energy markets.
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