The freight crisis has unfolded in two waves since the war began in March. VLCC rates from the Gulf to China initially jumped from around $4 per barrel to $17, then eased to $11–12 through April–July before the expiry of the US-Iran ceasefire in August triggered a second spike to $33 per barrel by late September. Alternative routes offered uneven relief: Saudi Arabia's Yanbu terminal on the Red Sea initially kept freight at $6–7 per barrel, but Houthi restrictions through Bab el-Mandeb drove that to $28 by mid-October, pushing landed costs to around $140 in China.
Saudi Aramco responded by setting its November Official Selling Price for Arab Light at a $5 per barrel discount to Oman/Dubai benchmarks, partially offsetting the $10–15 cost of shipping outside Hormuz. However, very few Asian refiners are willing to charter their own vessels into the Gulf. Aramco's strategy has shifted toward fixing differentials now for cargoes loading roughly two months later—securing buyers while leaving netbacks exposed to future freight movements. The use of tankers owned by Saudi national carrier Bahri, in which Aramco holds a 20% stake, allows some shipping income to remain within the affiliated business.
Shell's disclosure provided the clearest single-company measure of the freight shock. The company told investors its third-quarter profit doubled to $10.8 billion and raised its buyback to $5 billion, but the same release carried a $5.4 billion increase in shipping lease costs compared with the previous quarter. Chief Financial Officer Sinead Gorman clarified that the figure reflects a non-cash accounting adjustment to index-linked vessel charters, added directly to net debt rather than charged against profit. Middle East-to-China freight, she said, was "some 10 times what it was from even just 12 months ago," and the pressure was beginning to affect refining margins. Cumulative increases in shipping leases over the first nine months of 2026 ran $8 billion higher than the same period in 2025.
TotalEnergies experienced the same shock through a different accounting lane. Chief Executive Patrick Pouyanné said freight costs had climbed from roughly $2–3 per barrel before the war to about $25 per barrel, and that shipping was the main reason its liquids price realization fell $6 per barrel quarter over quarter. Where Shell's exposure appears as a balance-sheet liability, TotalEnergies' appears as lower realized prices—same conflict, same cost, different accounting treatment.
The freight surge has spread well beyond the Middle East. Brazil-to-China VLCC freight reached around $36 per barrel by mid-October, pushing landed Tupi prices to roughly $140 even as Brazilian FOB netbacks showed single-digit discounts to Brent. With Chinese buyers seeking delivered prices closer to $130, Brazilian offers into China slowed, making India a more attractive destination. West African Djeno crude faced similar dynamics: freight to China cost roughly $34 per barrel, $9 more than shipping to India, redirecting cargoes historically destined for Chinese refiners toward Indian refiners instead. India's imports from Angola were estimated to rise from 35,000 barrels per day in September to 315,000 barrels per day in October, with additional cargoes from Gabon and Congo heading to India's West Coast.
War-risk premiums have compounded the freight burden. Insurance costs for tankers in exposed areas reportedly rose to 7–8% of a vessel's insured value, translating to $9–10 million in additional costs for a large tanker, while delays at ship-to-ship transfer points could cost up to $1 million per day. These costs disproportionately affect Asian refiners, who have historically sourced around 60% of their oil from the Middle East. For some Asian refiners, shipping and insurance now account for as much as 30% of the delivered cost of crude, compared with the historical 3–7%.
The trade rebalancing is visible in loading patterns. Saudi loadings at Yanbu slowed to 1.6–1.8 million barrels per day—half the March–July average—following intensified Houthi attacks on Red Sea energy infrastructure, leaving the Gulf to handle the bulk of exports. Chinese refiners, meanwhile, have an incentive to wait for freight costs to ease, leaving producers to choose between absorbing transport costs, finding closer buyers, or committing barrels for future loading at prices that leave little room for today's freight bill. Their returns increasingly depend on shipping becoming cheaper before those cargoes sail.