Dmitry Evdokimov, Researcher of the Quantitative Analysis and Economic Effects Department at the Gaidar Institute, commented for Prime on the situation in logistic segment amid the conflict escalation in the Middle East.
According to the expert, the main consequence of military uncertainty will be market unpredictability rather than increased transportation costs.
"If military uncertainty persists, one should expect high volatility rather than steady increase in rates: the market will react sharply to news about route security, especially on the Persian Gulf-Asia (primarily China) route, the concentration center of the largest oil flows," noted Dmitry Evdokimov.
The expert explained that twofold freight rates increase on routes from the Middle East to China is a direct result of rising “war premiums.” Insurance companies are expanding risk zones and raising war-risk insurance rates, while many shipowners are choosing to avoid the Persian Gulf. As a result, the supply of available tonnage is shrinking, and voyage costs are rising, the expert added.