The hidden cost of avoiding the Gulf: tankers pay for the safe route

Photo: Zifeng Xiong · Pexels

Behind every barrel of oil that reaches port lies a logistical decision that has become far more expensive and complicated. Facing the risk of attacks in the Strait of Hormuz and the Bab el-Mandeb passage, several shipping companies are choosing much longer alternative routes for their tankers, which according to Reuters can add up to an extra month of sailing and roughly 2.5 million dollars per trip.

These two maritime corridors carry an enormous share of global crude trade, so any tension affecting them has a cascading effect. When a tanker decides to sail around Africa instead of crossing the Red Sea, it doesn't just increase fuel and crew costs, but also insurance premiums, which tend to spike whenever an area is deemed high risk.

Who ends up paying the bill

These extra costs don't stay on the shipping companies' books. Sooner or later they get passed on, to a greater or lesser extent, into the final price of oil and its derivatives, from gasoline to jet fuel. It's a reminder that crude prices depend not only on physical supply and demand, but also on the perception of geopolitical risk along the routes that crude has to travel.

As long as tension in the region doesn't ease, shipping companies are likely to keep choosing caution, even if that means longer routes and heftier bills. It's a quiet cost, but a real one, that rarely makes it into headlines about oil prices.