Disrupting shipping lanes in the Gulf is almost guaranteed to drive energy prices higher, but it remains to be seen if Iran will choose to take that path, which many consider a doomsday tactic that would slash its own oil export revenue and potentially prompt a strong military response from the United States and its allies in the region.
A look at oil tanker rates can provide a good real-time gauge of the escalating tensions. Benchmark rates for crude oil tankers from the Middle East to China have risen by nearly 50% since last week, reflecting the high risk premium tanker owners are now charged to move through the strait.
Meanwhile, China, which buys most of Iran's oil exports of over 1.5 million bpd, has built up a large oil stockpile that will help it mitigate any disruption to Mideast supplies, ROI Asia Commodities Columnist Clyde Russell wrote this week.
The conflict has also led to sharp gains in global diesel prices and refining margins, highlighting the vulnerability of diesel-heavy European consumers.
The Middle East is a major exporter of diesel, shipping 831,000 barrels per day in 2024, representing roughly 17% of global diesel seaborne imports, according to analytics firm Kpler. The majority of exports come from Kuwait, the United Arab Emirates and Saudi Arabia, which have all invested in expanding export-oriented domestic refining capacity in recent years.
Diesel is used for private and commercial transportation in Europe as well as industrial purposes, accounting for 44% of the region's overall oil demand of 13.5 million bpd in 2024, according to the International Energy Agency. Europe's imports of the refined fuel exceeded 1.2 million bpd last year, or roughly a fifth of the region's total diesel consumption, according to the IEA.
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