Six months into the U.S.–Iran war, Hormuz crossings are down 80% and diesel and jet fuel cost far more than before it began
Middle East Gulf tanker rates hit a record, European diesel cargoes are up about 70% since February, and Morgan Stanley sees oil markets in deficit into early 2027. Here is what that means for freight, energy and petrochemical-based categories.
Article summary
- Why it matters: Energy is an input to almost every category procurement buys: freight, air cargo, plastics, chemicals, packaging and anything energy-intensive to make. Six months of disruption through the Strait of Hormuz have kept refined fuel prices far above pre-war levels, and forecasters now expect the supply deficit to last into 2027. Contracts and budgets that assumed a quick return to normal need revisiting.
- What to do first: Index energy pass-throughs. Tie fuel and energy surcharges to published benchmarks with clear formulas and audit them.
- Budget for a long disruption. Use 2027 scenarios with fuel near current levels, not pre-war prices.
- 80%+
- drop in ship crossings through the Strait of Hormuz since Feb. 28
- $1,295.75/mt
- Mediterranean diesel cargoes, Aug. 26, vs. $762.75 before the war
- $107.72/mt
- record Middle East Gulf–Japan LR2 tanker rate, Aug. 27
- ~17%
- of Qatar's LNG export capacity taken offline
On this page
The details
The U.S.–Iran war began on Feb. 28, 2026. The Strait of Hormuz normally handles about 20% of global seaborne oil and LNG. S&P Global Commodities at Sea data shows ship crossings through it down more than 80% since the war began, and analysts said restricted trading and differing risk appetite among shipowners have made the tanker fleet less efficient. Gulf producers are developing longer alternative routes, which need more ships.
Fuel prices (Platts assessments):
| Product | Before the war (Feb. 27) | Late August | Five-year average |
|---|---|---|---|
| Diesel cargoes, CIF Mediterranean | $762.75/mt | $1,295.75/mt (Aug. 26) | $853/mt |
| Jet fuel, CIF Northwest Europe | $831.25/mt | $1,271.25/mt (Aug. 27) | $896/mt |
| Dubai crude | $71.23/bbl | $90.40/bbl (Aug. 27) | — |
Dubai crude peaked at $169.75 a barrel on March 23 when Hormuz traffic nearly stopped. European diesel refining margins are at their highest in at least 15 years, and Southeast Asian distillate imports ran about 20% below pre-war levels in August.
Shipping. Tanker earnings have reached historic highs. The benchmark Middle East Gulf–Japan LR2 route hit a record $107.72 per metric ton on Aug. 27.
LNG. QatarEnergy said in March that repairing Iranian missile damage at Ras Laffan would take three to five years and declared force majeure on some long-term contracts; about 17% of Qatar’s export capacity was taken offline.
Outlook. Morgan Stanley expects the oil market to stay in deficit through the fourth quarter of 2026 and the first quarter of 2027, with Brent peaking around $100 a barrel in the fourth quarter, and said the chance of a near-term resolution is diminishing.
The size of the moves. By our calculation from the Platts assessments, Mediterranean diesel cargoes were about 70% above their pre-war level in late August and Northwest European jet fuel about 53% higher. Dubai crude, after spiking to nearly $170 a barrel in March, had eased to about 27% above its pre-war level. Refined products have stayed elevated longer than crude because refinery margins, especially for diesel, have widened sharply.
Why shipping costs stay high. With crossings through Hormuz down more than 80%, Gulf producers are sending cargoes by longer routes, which ties up more tankers per barrel delivered. S&P Global’s Commodities at Sea analysts said restricted trading and differing risk appetite among shipowners have reduced fleet efficiency. Tighter tanker supply feeds through to freight costs for crude and refined products worldwide.
Why European diesel margins are so high. Analysts and traders attribute the widest European diesel refining margins in at least 15 years to three things at once: the Middle East conflict, Russian export restrictions and upcoming U.S. refinery maintenance, according to S&P Global. Southeast Asian buyers are extending charters on vessels that can still reach Middle East Gulf export programs. Damage also reached gas-to-liquids production: Shell’s Pearl plant at Ras Laffan was hit, and CEO Wael Sawan said on July 30 that repairs to its second train should be finished by the end of the first quarter of 2027.
Where it shows up in procurement categories
| Category | How energy flows through | What to expect |
|---|---|---|
| Truck, LTL and parcel freight | Fuel surcharges track diesel | Elevated surcharges; see our diesel coverage |
| Air cargo and travel | Jet fuel | Higher fuel surcharges and fares |
| Ocean freight | Bunker fuel, rerouting | Bunker surcharges; longer routes |
| Plastics, resins, packaging | Petroleum-based feedstocks | Upward pressure, though resin prices were easing through August |
| Chemicals and energy-intensive manufacturing | Natural gas and power | Higher costs, especially in Europe and Asia given LNG losses |
This mapping is our assessment.
A worked example: how diesel flows into a freight bill
ATRI’s 2025 cost study put the average cost of running a truck at $2.336 per mile, or $1.854 excluding fuel. That makes fuel about $0.48 a mile, or roughly 21% of a carrier’s total cost. If fuel costs rise 70%, in line with the move in Mediterranean diesel cargoes since February, the carrier’s total cost per mile rises by about 14% with no change in any other cost. These are our calculations from ATRI’s figures.
That is why fuel surcharges, not base rates, have done most of the work in freight invoices this year. It is also why a surcharge table that resets weekly against a published diesel index protects both sides: when fuel eases, the surcharge falls automatically and you don’t have to renegotiate.
Three scenarios for 2027 budgets
| Scenario | What would have to happen | What it means for budgets |
|---|---|---|
| Prolonged disruption | Hormuz traffic stays restricted into 2027, in line with Morgan Stanley’s view of a deficit through the first quarter | Fuel near current levels; elevated surcharges, tanker rates and petrochemical costs all year |
| Gradual reopening | A ceasefire or safe-passage arrangement lets traffic recover through 2027 | Crude eases first; refined products and refining margins lag by months |
| Escalation | Further damage to Gulf energy infrastructure or shipping | A spike like March, when Dubai crude reached $169.75 a barrel |
These scenarios are our framework, not a forecast. Most procurement teams should budget on the first and stress-test against the third.
Clauses to check in energy-exposed contracts
- Surcharge formula. Which index, which week, what base price and what increment per cent of change.
- Pass-through caps. Whether energy surcharges can exceed a set percentage of the invoice.
- Downward adjustment. Whether surcharges fall as fast as they rise.
- Force majeure. Whether war or shipping disruption excuses performance, and what notice and mitigation the supplier owes you.
- Reopener clauses. When either side can reopen price if energy moves beyond a band.
What procurement teams should do
- Index energy pass-throughs. Tie fuel and energy surcharges to published benchmarks with clear formulas and audit them.
- Budget for a long disruption. Use 2027 scenarios with fuel near current levels, not pre-war prices.
- Ask suppliers for energy share of cost. Know which suppliers are most exposed and how they hedge.
- Review force majeure clauses. Make sure you understand what qualifies and what notice suppliers must give.
What to watch next
- Hormuz traffic and any negotiations toward a ceasefire.
- Brent and diesel prices heading into winter heating demand.
- LNG supply as Qatar’s repairs continue.
The bigger picture
A disruption in one strait has spread through freight, fuels, chemicals and manufacturing costs worldwide. It is the clearest case this year for energy-indexed contracts and for knowing how much of each supplier’s cost is energy.
Questions procurement teams are asking
How has the Iran war affected shipping through the Strait of Hormuz?
S&P Global Commodities at Sea data shows ship crossings through Hormuz down more than 80% since the war began on Feb. 28, 2026. The strait normally carries about 20% of global seaborne oil and LNG.
How much have diesel and jet fuel prices risen since the war began?
Platts assessed Mediterranean diesel cargoes at $1,295.75 per metric ton on Aug. 26, against $762.75 on Feb. 27, and Northwest European jet fuel at $1,271.25 per ton on Aug. 27, against $831.25 before the war.
How much does a rise in diesel prices add to trucking costs?
Using ATRI's 2025 figures, fuel is roughly 21% of a truck's operating cost. A 70% rise in fuel would lift total cost per mile by about 14%, by our calculation, which carriers recover mainly through fuel surcharges.
Should procurement budget for oil prices falling in 2027?
Morgan Stanley expects the oil market to stay in deficit through the first quarter of 2027. Budgeting with fuel near current levels and stress-testing a spike is the more cautious approach.
How we reported this
This signal report draws on 2 sources, listed below, and reflects figures as reported on August 28, 2026. The sections on why it matters and what procurement teams should do are Procurement Signal analysis. It is not legal or financial advice. See our editorial standards.
