Journal · · 1 min read
Gulf crude freight rates jump 6–7x as Hormuz crisis drags on
Per Reuters (November 6, 2026), citing Valero's and Phillips 66's third-quarter earnings calls, freight on the US Gulf Coast-to-Asia route has climbed to $30–35 a barrel from about $5 a year ago, according to Valero's VP of supply, Randy Hawkins. The cause is Strait of Hormuz risk tied to the Iran conflict: war-risk insurance premiums have risen and voyages have gotten longer. Phillips 66 estimates each $1 of widening in the spread between Canadian WCS crude and WTI is worth about $140 million in extra profit; the company locked in more than 40 time-chartered vessels in advance, covering about 40% of its fleet needs and shielding it from the spot-rate spike.
Crude freight has become the headline story on US refiners' earnings calls. Per Reuters on November 6, 2026, Valero's VP of supply Randy Hawkins said shipping crude from the US Gulf Coast to Asia now costs $30–35 a barrel, up from about $5 a year earlier. This isn't a one-off spike: freight has been climbing since the Iran conflict began raising risk levels in the Strait of Hormuz, the key chokepoint for tankers moving out of the Persian Gulf.
For US refiners, that's turned into an advantage rather than just a cost. Valero's commercial chief Gary Simmons said the high freight strengthens the company's position in Latin America, where its main competitors are European suppliers now struggling to compete on delivered price. Phillips 66 sees a similar effect from a different angle: executive VP of marketing Brian Mandell estimated that every dollar of widening in the spread between Canadian heavy crude (WCS) and the WTI benchmark is worth about $140 million in extra profit to the company, and US refining margins more than doubled in the third quarter.
Both companies hedged against the spot-rate spike in advance: Phillips 66 locked in more than 40 time-chartered vessels before the conflict began, covering about 40% of its fleet needs. For freight forwarders and shippers working with tanker freight, the takeaway is that the Hormuz risk premium isn't easing yet — and that long-term charters remain a way to shield against spot-market volatility.
Source: Reuters, November 6, 2026 — https://www.kitco.com/news/off-the-wire/2026-11-06/soaring-freight-rates-give-us-refiners-edge-crude-discounts-widen
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