The U.S. and Iran have been fighting for over seven months, turning WTI into a roller coaster.

What happened around September 10? Within two days, the U.S. military sank eight Iranian oil tankers; Iran retaliated by targeting过往 vessels. Saudi Arabia’s East–West Pipeline was struck by drones launched from Iraq and shut down; this pipeline—designed to carry roughly 5 million barrels per day—is Saudi Arabia’s ‘lifeline’ bypassing the Strait of Hormuz. In late September, the UN General Assembly convened in New York: U.S. and Iranian representatives held three hours of talks, after which the U.S. immediately rejected Iran’s proposal. Iran floated a plan to ‘reopen the Strait within one week,’ only for Trump to publicly declare, ‘I rejected it.’ On September 23, WTI closed up 1.81% at $92.16—negotiations had failed, and transit through the Strait dropped again to just two vessels per day, forcing WTI to grind sideways at elevated levels. Current situation: $91—and waiting for the election. From late September into early October, oil prices first fell back toward $87. On October 6, Strait transits dropped to seven vessels—still in single digits. Two days later, this figure ignited the market: on October 8, WTI surged over 4% in a single day; on October 9, it rose another 0.39%, closing at $91.85. The latest developments are contradictory: Trump has publicly pledged not to strike Iran before the midterm elections—but the Pentagon has already directed U.S. Central Command to complete large-scale combat preparations. The script is clear: no action before the election, but escalation possible anytime afterward. Meanwhile, Iran’s Islamic Revolutionary Guard Corps has warned its strikes will extend beyond the Strait of Hormuz. A hurricane in the Gulf of Mexico further complicated matters, halting 1.5 million barrels per day of U.S. production. Analysts expect WTI to trade in a narrow range of $90.50–$92.50 in the near term—the breakout direction hinges on Iran’s response to Washington’s counterproposal and the pace of post-election military escalation. There’s also a hidden freight-cost thread—one that only becomes fully visible now: VLCC daily charter rates for the Middle East–China route have skyrocketed from ~$120,000 pre-war to over $1.2 million, translating to freight costs of $22–$25 per barrel. Freight now accounts for roughly one-fifth of refiners’ landed cost. This has made Middle Eastern crude significantly more expensive—and ironically amplified WTI’s relative value proposition. That’s why this ‘mirror’ remains worth watching closely. Finally, a few personal observations: Looking across these seven-plus months, this conflict differs fundamentally from any prior oil crisis: First, it targets economic lifelines—not territory. From closing the Strait to sinking tankers, from sanctions to threats of zero exports, all firepower focuses squarely on oil export capacity. For the first time, this waterway has shifted from background scenery to the main battlefield. Second, it combines military, economic, and institutional pressure. Airstrikes, sanctions, and legislation aimed at permanently institutionalizing control over the Strait proceed in parallel—meaning war-related costs won’t vanish with a ceasefire. War-risk insurance premiums illustrate this starkly: from 0.25% pre-war, they jumped to 3% by end-March, and reached ~10% of hull value by late September—a ~40-fold increase. These costs won’t auto-reset upon truce. Third, the front lines keep fracturing. Simultaneous flare-ups occur at the Strait of Hormuz, the Red Sea, and U.S. bases in Iraq and Syria. The Houthis ignore U.S.–Iran negotiations entirely, striking Saudi targets unilaterally—local ceasefires cannot contain the broader conflagration. Fourth, a hidden thread deserves separate mention: the reported vessel-transit numbers may not reflect reality. Starting in May, isolated tankers began disabling AIS transponders to ‘go dark’ while transiting; by August, this practice had scaled up significantly. Publicly visible export volumes hover around 10 million barrels per day—yet actual flows may reach 15–16 million bpd, leaving a gap of ~5 million bpd.

Middle Eastern oil exports have recovered, yet soaring freight costs have left Asian refiners nearly profitless.

However, according to Reuters, the recovery in crude oil supply has failed to lift Asian refining margins in tandem—some refiners’ net profits have already approached zero. This divergence reveals a deeper structural distortion underlying the current energy crisis: the problem has shifted from crude scarcity to refined-product scarcity, and the abnormal surge in logistics costs is severing the transmission link between supply recovery and margin improvement. Freight erodes margins—Asian refiners bear the brunt. Under normal market conditions, freight and insurance typically account for just 3–7% of crude landed cost. That ratio has now been completely upended. Iran’s persistent attacks on tankers transiting the Strait of Hormuz have not only driven up freight and insurance premiums but also forced traders and producers to build complex ship-to-ship (STS) transfer systems outside the Persian Gulf. This system consumes massive global tanker capacity, pushing up freight rates far beyond the Middle East—across the globe. According to LSEG data, shipping a 2-million-barrel cargo from Nigeria to Singapore now costs about $32 per barrel—roughly eight times pre-war levels. ROI estimates suggest freight and insurance combined now account for up to 30% of landed crude cost for some refiners. Asia’s vulnerability is especially acute. Historically, ~60% of the region’s crude supply came from the Middle East. Since the war erupted, many Asian refiners have cut run rates and sought alternative supplies from the U.S. and South America—driving transport costs sharply higher. By contrast, U.S. and European refiners enjoy geographic advantages and reaped record-high margins last month. Oil producers trade price for volume—revenue losses become unsustainable. The report notes that, facing buyer hesitation in Asia, Middle Eastern producers have slashed official selling prices (OSPs) dramatically—some reportedly offering discounts as high as $30 per barrel to offset buyers’ soaring logistics costs. This strategy reflects Gulf producers’ current dilemma: they need to maximize export volumes to rebuild fiscal revenues damaged during wartime, yet widening discounts are eroding real per-barrel revenue. If hostilities persist, discounts may widen further—exacerbating revenue pressures. According to Reuters, Asian refiners confronting shrinking margins can respond by: lowering overall run rates; concentrating output on higher-margin products like diesel; or drawing down domestic inventories instead of importing. Any of these measures would directly reduce demand for Middle Eastern crude—undermining Gulf producers’ efforts to revive exports. Crack spreads under pressure—structural tightness in refined-product markets. Another facet of the current energy crisis is structural shortage across global refined-product markets. According to the International Energy Agency, global refinery throughput is projected to fall by 2.3 million barrels per day to 81.7 million bpd this year. Eight months into the Middle East conflict, multiple refineries have sustained damage; Ukrainian strikes on Russian refining infrastructure have further tightened supply. Diesel markets have been hit hardest—prices briefly hit record highs last month. The dual pressures of expanding discounts and surging freight costs are reshaping global crude pricing dynamics. Substantial discounts on Middle Eastern crude versus benchmark prices are weakening regional benchmarks’ reference value, while high freight costs inflate landed costs in Asia—severely compressing actual crack-spread profitability. Refiners’ operating willingness remains persistently suppressed.

Goldman Sachs Says War Spurs Sevenfold Jump in Oil Freight Rates

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Goldman Sachs reports oil freight rates surged sevenfold to over $20 per barrel amid Middle East war risks, potentially influencing Brent price forecasts through elevated geopolitical premiums.

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