- Heightened geopolitical tensions in the Middle East.
- The Iran war breakout has disrupted oil markets, forcing India and the RBI to assess economic resilience against the wider Middle East crisis.
- Marathon Petroleum operates as an integrated downstream energy company amid the disruption of the Strait of Hormuz, which affects global markets.
- Attacks and threats against commercial shipping and major disruption to exports due to conflict in the Middle East.
Gulf Attacks Drive Up Shipping Costs, Prompting Shift to CIF Crude Procurement
- Reports
- 2
- Developments
- 1
- Repetition
- 50%
New informationRepeats or wire copies
What happened
Amid disruptions and attacks involving vessels in the Gulf region, freight and insurance costs for crude shipments have risen sharply. Consequently, Indian refiners are increasingly shifting their crude procurement from FOB terms to CIF (delivered) arrangements to secure a more predictable landed cost. This shift allows sellers to cover the cost and risk of transport to the buyer’s destination.
Why it matters
Geopolitical tensions in the Middle East are driving sharp swings in freight and insurance costs. This instability directly influences the price and volatility of Brent crude oil. The shift to CIF allows refiners to mitigate exposure to sudden increases in freight rates.
Attacks and threats against commercial shipping and major disruption to exports due to conflict in the Middle East.
Who's involved
- IndiaIndian refiners are shifting crude procurement to a delivered basis.
- CIFThe financial term used to cover the cost and risk of transporting crude.
- Middle EastThe geopolitical region where attacks are driving up maritime risk and costs.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- IndiaSpeculative
Indian refiners might face higher landed crude costs due to increased freight and insurance.
- companySpeculative
Companies might face squeezed competitive positions due to rising landed costs when using CIF terms.
- HormuzSpeculative
The Hormuz chokepoint could see increased maritime risk and insurance costs.
Keep exploring
The entities involved
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Middle East
geopolitical region encompassing Egypt and most of Western Asia, including Iran
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CIF
incoterm
Nothing else this week.
Related events
- Escalation in the Gulf region due to Iranian actions has led to attacks on transport networks and commercial shipping lanes across the Middle East.
- Security concerns are being reported in the Middle East region.
- There is currently a lack of immediate supply risks in the Middle East.
- Supply disruptions are occurring due to the ongoing war in the Middle East.
- New export routes are being planned from Gulf states as energy security challenges shift capital allocation globally.