Sailors are reportedly being offered as much as $25,000 a trip to move trapped oil through the dangerous, war-rattled Persian Gulf – meaning producers are spending up to $40 million total for a multi-day trip through the region.
The jaw-dropping payments – sometimes worth two or three times a sailor’s typical monthly salary – are an attempt to convince crew members to risk the potentially deadly strikes and drone attacks in the region, the Wall Street Journal reported.
Fresh data on Monday showed the payouts are working, as crude exports through the Strait of Hormuz reached 16.5 million barrels per day in September – far above lows of 5 million barrels a day in March, right after the Iran war broke out, according to research firm Kpler.
On Monday, Brent crude oil futures eased 1.5% to $100.74 a barrel and West Texas Intermediate crude slipped 1% to $90.16 a barrel on news oil is moving out of the Gulf at its fastest pace since the war started – even as attacks on vessels have ramped up.
In just the past two weeks, nine commercial vessels were attacked near the strait – resulting in two injuries and one seafarer’s death, according to the International Maritime Organization and the UK Maritime Trade Operations Center, which is affiliated with the Royal Navy.
Producers have been hiring very large crude carriers, or VLCCs, to complete treacherous “shuttle runs,” which is when carriers enter the Gulf through the strait, load up at ports, exit through the strait and then transfer the oil to another vessel waiting just outside the waterway.
They’re swallowing record costs to do so, paying sailors a premium to risk being attacked in the region, but it’s better for them to sell the oil at thinner margins than let it sit trapped in the Gulf, according to the Journal.
It’s also costing more to bring that oil to global markets. In late September, it cost more than $1.2 million per day to hire an oil supertanker to China – up from $231,400 the day before the war, and less than $40,000 a day in January, per maritime data provider Clarksons Research.
As producers pay $30 million to $40 million for a round trip, shipowners are reaping record profits – and so are sailors.
Many crew workers from India, the Philippines and China are accepting as much as $25,000 for a round trip to confront the dangers in the war zone. For lower-level workers like oilers and cadets, those payments are sometimes more than their annual salary, the Journal reported.
These risky trips often involve moving at night with the windows closed, no lights and GPS signals switched off, according to reports.
Last week, Europe caved to President Trump’s demands to release diesel oil reserves as Republicans are eager to reduce gasoline and diesel prices – which are stubbornly above $4 and $6 a gallon, respectively – ahead of the November midterm elections.
The G7 nations, including the US, France, Italy, Germany, Japan, Britain and Canada, agreed to release 100 million barrels of diesel and crude from their stockpiles, but experts warned it could have little to no effect on prices at US pumps.
Trump is also expected to issue an executive order as soon as Monday to expand access to tax-exempt diesel in an effort to ease consumer prices.