A Shortage of Oil Tankers Is Threatening to Keep Gas Prices High

The Iran war has created a new shortage on the oil market. This time the scarce commodity isn’t just crude—it is the ships that carry it.

Drone attacks that shut Saudi Arabia’s bypass pipeline earlier this month have forced more crude back through the Strait of Hormuz and onto a tanker fleet already stretched thin. The impact has spread worldwide, as longer voyages and shuttle runs around Hormuz tie up ships and push the daily rate of hiring oil tankers to records.

The squeeze adds another cost to a war that has been disrupting energy supplies across the globe. Fewer available tankers are slowing oil deliveries just as record shipping costs squeeze refiners’ margins, threatening to keep fuel prices high even if global crude prices fall. That could add fresh pressure on U.S. gasoline prices before November’s midterm elections.

“What matters for refiners is the delivered cost of the crude, and that includes freight,” said Adi Imsirovic, a former energy trader, and lecturer at the University of Oxford. “The price at the pump includes all of it and the consumer has to pay the full price.”

The sudden supply crunch among oil supertankers—known as very large crude carriers, or VLCCs—has boosted the cost of hauling oil through the strait to the highest on record. Earlier this month, the cost of hiring an oil supertanker to load inside the Persian Gulf and transit the Strait of Hormuz topped $1 million a day, according to maritime-intelligence firm Windward. That works out to $26 a barrel, or roughly a quarter of the crude’s value based on the current market price. Normally, shipping costs are a fraction of the value of a crude cargo.

The tanker shortage extends beyond the Middle East. Rates around the world, such as those for the West Africa to China route, are also surging. Globally, average daily earnings for a VLCC reached $651,107 Thursday, nearly doubling from a week earlier, before Saudi’s bypass pipeline, known as the East-West Pipeline, was shut, according to Clarksons Research.

The pipeline is the kingdom’s main bypass around the strait. It carried crude from the Persian Gulf to the Red Sea port of Yanbu. From there, the Saudis had been able to ship millions of barrels of oil to customers around the world.

People familiar with the operations of Saudi Aramco, the kingdom’s state oil company, say it is possible the pipeline could be partially restarted within days, though hurdles remain over some technical issues. Meanwhile, Yanbu hasn’t loaded any crude tankers since the attacks, according to ship trackers.

Aramco has warned some European and Asian customers to expect delays or cancellations for September and October, the people said. If partial pipeline flows aren’t restored in the coming days, more crude shipments could be scrapped, they said.

Saudi-flagged vessels have stopped transiting Bab al-Mandeb Strait, a maritime chokepoint connecting the Red Sea to the Gulf of Aden now controlled by the Houthis , amid the pipeline outage and attacks on Saudi vessels by the Iran-aligned Houthi militants, according to ship trackers.