The security crisis in the Strait of Hormuz and the shrinking tanker supply have turned into a rare public debate over oil transportation costs between Saudi
The security crisis in the Strait of Hormuz and the shrinking tanker supply have turned into a rare public debate over oil transportation costs between Saudi Arabia and Iraq.
Iraqi Oil Minister Basim Muhammed, in his speech in the parliament, said that the transportation cost of Iraqi oil increased from 26 dollars to 37 dollars per barrel. Mohammed linked this increase to Saudi Arabia's claim that it purchased 25 tankers for approximately $4.5 billion.
Saudi Arabia's Ministry of Energy announced that the information that 25 tankers were purchased was not true. Riyadh stated that the regional military conflict and navigation disruptions in the Strait of Hormuz had pushed freight and insurance expenses to "exceptional levels".
The background of the debate is that visible ship passages through the strait remain well below pre-war levels. While regional producers are turning to ship-to-ship transfers and different loading schemes in the Gulf of Oman to maintain exports, longer waiting times and security measures make the use of tankers more expensive.
Iraq is among the producers most affected by the cuts, as most of its export infrastructure is connected to the Persian Gulf. Although Saudi Arabia's East-West pipeline extending to the Red Sea offers an alternative, attacks in the region also pressure the reliability of this corridor. The tanker purchase claim has not been confirmed due to contradictory statements by the parties; What is certain is that the freight load originating from Hormuz is eroding the net income of the region's oil.
Source: SeaNews Türkiye
