Global oil markets are once again facing heightened uncertainty after renewed tensions surrounding the Strait of Hormuz raised the prospect of additional shipping costs that analysts warn could become a long-term burden on energy prices.
The latest concerns follow renewed efforts by the United States to tighten pressure around the strategic waterway, alongside US President Donald Trump’s proposal that vessels passing through the Strait of Hormuz should pay a 20% toll. At the same time, Iranian officials have argued that Tehran has the authority to oversee the passage and should receive compensation for ensuring safe navigation.
Financial advisory firm deVere Group believes the dispute could effectively create a new global surcharge on energy, regardless of which country ultimately controls any future toll system.
Nigel Green, chief executive of deVere Group, said consumers and businesses around the world would ultimately absorb the additional costs if shipping charges are introduced.
“The cost will not stop at the Strait of Hormuz,” Green said, arguing that higher transport costs would ripple through global fuel markets, supply chains and household budgets.
Around one-fifth of the world’s oil and natural gas shipments pass through the narrow waterway connecting the Persian Gulf to international markets, making it one of the world’s most strategically important energy routes.
Shipping costs could reshape global energy prices
Green said industry estimates suggest that a 20% transit fee could increase the cost of crude oil transported through the Strait of Hormuz by around $16 per barrel. For a single supertanker, additional shipping costs could reach approximately $32 million.
Although the International Maritime Organization has indicated there is currently no recognised legal basis for either the United States or Iran to impose mandatory transit charges, Green believes financial markets are focused less on legal arguments than on the practical consequences for global trade.
According to Green, whichever government ultimately succeeds in enforcing a toll, the additional expense would likely be passed directly to refiners, fuel distributors, businesses and consumers worldwide.
The renewed geopolitical tensions have already affected shipping activity. Vessel traffic through the Strait of Hormuz has reportedly fallen by more than 50% over the past week, while Brent crude oil has climbed above $85 per barrel after previously trending closer to $70 during recent diplomatic negotiations.
Analysts quoted by Bloomberg expect oil prices to remain around the $80-per-barrel level unless there is a significant breakthrough regarding access to the Strait. While a return to $90 or even $100 oil is considered less likely at present, uncertainty continues to dominate market sentiment.
They added that oil prices could fall rapidly towards $60 per barrel if normal shipping operations resume.
South African motorists still on track for August relief
Despite renewed upward pressure on international oil prices, South African motorists may still receive some relief next month.
The latest fuel price outlook from the Central Energy Fund (CEF) continues to show positive over-recoveries, although the margin has narrowed considerably since the beginning of July.
Petrol is currently showing an over-recovery of around R1.40 per litre, compared with approximately R2.50 earlier this month. Diesel has also weakened, with its over-recovery falling from roughly R3.00 per litre to around R1.00 per litre.
If global oil prices and the rand exchange rate remain relatively stable over the coming weeks, motorists could still benefit from lower fuel prices in August.
However, fuel costs remain significantly higher than before the latest Middle East conflict escalated in late February. Analysts warn that any prolonged disruption to shipping through the Strait of Hormuz would likely keep global energy prices elevated for longer, placing renewed pressure on inflation, transport costs and economic growth.
Source: deVere Group, Bloomberg, Central Energy Fund (CEF).