Crude shipping costs top $20 a barrel as Goldman Sachs flags upside risks

Key Facts

Goldman Sachs said average global crude oil shipping costs exceeded $20 a barrel, describing higher transport costs as an upside risk to its Brent price forecasts, Reuters reported on October 21, 2026. That compares with an average of $3 a barrel a year earlier, according to the bank's estimates of global crude freight costs. Costs on routes linked to the Middle East were above the global average, exceeding $35 a barrel. The bank's estimate covers the cost of transporting crude, which has risen amid shipping risks and tankers being tied up in transit services through the Strait of Hormuz. Goldman Sachs' assessment coincided with changes by Asian refiners and Gulf producers to shipping and delivery arrangements.

Goldman Sachs analysts detailed the factors behind higher transport costs, estimating that the war-risk premium in the Strait of Hormuz contributed $7 a barrel, Bloomberg reported. Alongside the war premium, the bank attributed another $4 a barrel of the increase to higher fuel prices. It estimated the impact of ship-to-ship transfers at the same amount, $4 a barrel, in its analysis of the factors driving up freight costs. In the context of transit arrangements through the strait, Vitol's head of Asia said about 80 very large crude carriers were tied up in shuttle services. Reuters cited his estimate in its October 20, 2026, coverage of Asian refiners' response to rising shipping costs.

Asian refiners turned to smaller tankers to reduce the cost of crude purchased to feed their refining operations, according to Reuters. Their response also included using vessels chartered under long-term contracts as part of arrangements to address rising freight costs. Alongside changes to vessel sizes and charter contracts, refiners bought crude on a delivered basis instead of arranging shipment of those purchases themselves. On the supply side, traders told Reuters that ADNOC and Aramco sold crude cargoes on that basis to buyers in Asian markets. Producers bore the shipping costs in those sales, according to the traders, making the delivered deals part of the commercial response to the rising cost of transporting refinery feedstock.

Those arrangements were preceded by a decline in freight rates for the largest oil tankers from record levels during the week before the report, as demand weakened following attacks on ships, according to Reuters. A Sparta analyst said U.S. administration comments about potentially easing sanctions on some shadow-fleet tankers also helped lower freight rates. On the route carrying U.S. crude to China, charter rates fell to $634,974 a day on the Friday before the Reuters report published on October 12, 2026. The same route had recorded a record rate of $637,675 a day on October 8, before the subsequent decline. Those moves in the tanker charter market followed record highs, while Reuters' coverage linked the decline to softer demand and the sanctions comments.

In the oil market, prices rose in early Asian trading on Wednesday as concerns over Middle Eastern supplies intensified, according to Reuters. Risks accompanying the price rise included threats to shipping in the Red Sea, alongside concerns about continued oil flows from the region. Threats to Saudi oil infrastructure were also cited among the factors behind supply concerns during that trading session. In the refining sector, Goldman Sachs said higher freight rates were "squeezing net refinery margins," Reuters reported, citing the bank. It added that higher transport costs were also supporting refined product prices and widening differentials between crude grades, alongside the pressure on refinery margins.

Despite shipping-related upside risks, Goldman Sachs maintained its base case for Brent crude to fall to $90 a barrel by the end of 2026. Under the same scenario, the bank expects Brent to average $80 a barrel in 2027, according to its forecasts reported by Reuters. On U.S. inventories, a Reuters poll showed expectations for crude stocks to fall by about 800,000 barrels in the week ended October 16, 2026. That figure represents the poll's average forecast for the period covered by the weekly inventory report, ahead of the official reading from the U.S. Energy Information Administration. According to the agency's schedule, the regular weekly release is due on Wednesday at 10:30 a.m. U.S. Eastern time.