The cost of shipping a tanker of crude oil has skyrocketed due to war

$79 million: That’s what it could cost to send one giant ship full of crude oil across the sea from the U.S. Gulf Coast to China. It’s a price tag many times higher now than it was before the U.S. and Israel’s war with Iran disrupted global energy markets and supply chains.

Around the world, out on the open sea, there are only 900 or so very large crude carriers, or VLCCs.

“[One VLCC can] carry 2 million barrels,” said Nick Watt with Argus Media. Those carriers used to charge $3 to $6 per barrel before the war. “And now, it has absolutely skyrocketed, and freight rates for VLCCs carrying U.S. crude to Asia about $38 per barrel,” he said.

That price reflects the increased demand for a limited number of tankers because of all the extra lifting it takes to move oil around the world these days.

“They're using vessels and sometimes smaller vessels to get oil through the Strait [of Hormuz], which is most risky. And they're transferring it onto other vessels out in the Persian Gulf, where the Iranians can't strike them,” said Dan Pickering with Pickering Energy Partners.

You need more vessels and there’s more risk. So refiners are paying more for shipments of crude oil, especially in Asia, said Rick Joswick, head of near-term oil analytics at S&P Global Energy.

“Refinery margins in Asia are getting a little thin,” he said.

Thin, or negative in some cases, at a time when diesel and gasoline are in short supply.

“The world is looking to run more crude someplace else to make the products and backfill that loss,” Joswick said. “The only spare capacity is out in Asia, and if those margins in Asia are negative, they're not going to run it.”

Which puts more upward pressure on fuel prices for all of us.