Crude oil climbed toward $97 a barrel over the past week as an escalating exchange of tanker strikes between the United States and Iran choked traffic through the Strait of Hormuz, and the business fallout is landing hardest not in the price of gasoline but in the cost of getting a barrel of oil onto a ship in the first place.
Brent crude has risen roughly 9% over the past week, its steepest weekly gain since mid-July, after Washington struck three Iranian oil tankers over the weekend in retaliation for missile fire aimed at U.S. Navy vessels patrolling near the strait, and Tehran responded by targeting tankers and other vessels it linked to the United States. Marine analytics firm Kpler recorded as few as five to eleven vessels transiting Hormuz on individual days last week, against a longer-run daily average nearer 13 — a steep drop for a waterway that normally carries roughly a fifth of the world's seaborne oil.
Insurance, Not Just Oil, Is Repricing the Region
The clearer signal of how seriously shipowners are taking the risk is showing up in insurance markets rather than the crude futures screen. War-risk premiums for vessels transiting the strait have surged to roughly 7.5% to 10% of a ship's hull value, up from about a quarter of a percentage point before hostilities began — meaning a $100 million tanker that once paid around $250,000 to insure a transit can now face a bill north of $7 million for the same trip. Brokers including Marsh have confirmed the increases are being driven directly by the intensifying tanker attacks rather than by broader market conditions. Freight rates for very large crude carriers moving oil from the Gulf to China have jumped in tandem, spiking as much as 24% in a single session — the sharpest one-day move of the year for that route.
Those costs are ultimately passed through the supply chain. U.S. diesel prices touched a record above $5.80 a gallon last week, and refiners and shippers say the combination of higher crude, pricier insurance and longer, more cautious routing around the strait is compounding rather than offsetting itself.
Reserves Already Drawn Down
Governments have not been passive. In March, International Energy Agency member countries agreed to release 400 million barrels from strategic reserves, the largest coordinated drawdown in the agency's history, with the U.S. alone committing more than 170 million barrels from its Strategic Petroleum Reserve. That cushion has been largely spent absorbing months of disruption, and traders say there is limited additional capacity to repeat a release of that size if the tanker war drags on. OPEC+ producers, for their part, have shown little appetite to open the taps further given the risk that a sudden de-escalation could send prices sharply lower.
For now, energy traders are treating the strait as a market where price is set less by production numbers than by the daily calculus of which shipowners are willing to send a vessel through a war zone. Every additional week of tit-for-tat strikes adds to insurers' loss estimates and, in turn, to the price embedded in every barrel that does get through — a dynamic that is proving far stickier, and more expensive, than the headline crude price alone would suggest.
