$20 mln: New cost of shipping oil through Hormuz

TotalEnergies SE chief Pouyanne stated on Monday that the cost of shipping oil cargoes through the Strait of Hormuz has reached $20 million. He emphasized the significant margins required by traders and shipowners to make a profit. TotalEnergies is taking advantage of the substantial discounts offered by Middle Eastern crude producers, with oil prices trading at $50-$60 a barrel, which is far below the Brent crude price of over $90 a barrel.

These discounts are helping to offset the much higher costs of transporting oil through the Strait of Hormuz, which amounts to nearly $10 a barrel, Pouyanne added.

The French petrochemical giant is among the largest traders of oil from Iraq and Qatar, both nations that have continued to ship oil through Hormuz despite the ongoing war. Pouyanne also noted that the number of producers utilizing the Strait of Hormuz has increased, keeping global oil prices from soaring beyond $100 a barrel and creating lucrative trading opportunities for intermediaries.

He further highlighted that the crude and fuel markets are diverging. While crude markets remain bearish due to continued flows through the Strait, fuel markets remain tight, leading to a rise in the prices of refined products like gasoline and diesel. These price increases can be attributed to Ukrainian attacks on Russian refineries, and the dominance of crude shipments through Hormuz has further constrained fuel supplies.