Jet fuel costs could double in the coming days as dozens of tankers remain stranded in the Strait of Hormuz, as Tehran vows to keep blocking the waterway in retaliation for US-Israeli military strikes.
Oil prices rose above $100 per barrel on Friday (March 13) after Iran’s new Supreme Leader, Mojtaba Khamenei, pledged to maintain the effective closure of the Persian Gulf Channel, which typically sees 20 percent of global oil shipments pass through.
Six ships were attacked in the waterway in a matter of 48 hours, while U.S. officials said that Iran has laid sea mines in the narrow waterway, further deterring shippers.
Carriers have responded with significant fuel surcharge increases. Should crude oil prices continue to rise, surcharges – and freight rates – could climb further.
Airlines that tentatively returned to the Middle East have largely pulled back, with some suspending flights into the region through the end of March.
Air cargo backlogs build in India
Air cargo capacity in India is tightening as backlogs mount at major export hubs, particularly Delhi, with congestion impacting other Indian cities that rely on the capital territory as a transit hub.
Some airlines are carrying additional fuel on certain routes as a contingency, reducing the cargo capacity available on passenger aircraft. Shipments are piling up as available space shrinks, with several carriers restricting new bookings while they work through existing volumes.
War risk exclusions
As the situation in the Gulf deteriates, many insurers have withdrawn Standard War, Strikes, Riots and Civil Commotions (WSRCC) cover for cargo transiting through or destined for Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.
The exclusions apply to both ocean and air freight and further cancellations or revised terms may follow. Rerouting is also expected to add costs and delays, particularly for temperature-sensitive, perishable and seasonal cargo. With vessels diverting via the Cape of Good Hope, transit times will increase significantly.
CMA CMG reopens Middle East bookings
After temporarily suspending services earlier this month due to escalating security risks, CMA CGM announced Wednesday it has resumed export and import bookings for several Middle Eastern countries, including Iraq, Kuwait, Qatar, Bahrain, Saudi Arabia and the UAE.
The carrier announced it will maintain service through alternative logistics solutions, including feeder vessel connections and land-bridge routes, moving containers through neighbouring ports before final delivery.
Drones strike ports and airports
Fuel storage tanks at Oman’s Port of Salalah were struck by drones this week, forcing a suspension of port operations and bunkering activity. Salalah is a critical refuelling and cargo transfer hub in the Arabian Sea; any interruption to bunkering services can ripple across multiple trade lanes.
Dubai International Airport temporarily halted operations after a nearby drone strike wounded four people on Wednesday morning. Flights have since resumed.
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