Oil exports recover, but shipping costs hit record highs Recent data shows that oil exports from the Gulf region have recovered to about 80% of pre-war levels, but oil prices remain elevated. While the recovery in supply helps ease shortages, the process of getting this oil back into the market has come with significantly higher shipping costs. Some crude oil now requires alternative routes, short-distance transfers, and ship-to-ship transfers to reach buyers. With more steps in the transportation process, waiting times and turnaround times are longer, reducing the amount a single vessel can transport. To ship more oil, more tankers are needed, tightening shipping capacity and driving up freight rates. For refineries, the ultimate calculation is the total cost of getting crude oil delivered. Even if crude prices drop slightly, high freight and insurance costs could offset some of the decline. These additional costs either squeeze refinery profits or get passed on to gasoline, diesel, and jet fuel prices, making it harder for businesses and consumers to feel a corresponding drop in energy prices. At the same time, the market is still questioning how stable this supply recovery will be. As long as risks of disruptions to shipping lanes, ports, and pipelines remain, the short-term rebound in exports won’t fully ease concerns about supply interruptions, and the war premium in oil prices will persist. This means the impact of supply recovery on oil prices will only be fully realized if shipping efficiency improves, freight costs decrease, and safety risks are mitigated. If high-cost shipping methods continue to sustain exports, energy’s pressure on inflation could persist, limiting the Federal Reserve’s room to cut interest rates. Check out @Gate for trading in more markets!