By: Russ Kamp, CEO, Ryan ALM, Inc.

The cost of transporting crude oil has exploded, adding another significant inflationary pressure to the global energy supply chain. Hiring a Very Large Crude Carrier (VLCC) to move U.S. oil to Asia now costs roughly $77 million, compared with an average of just $9.2 million in 2025. That is an increase of nearly 740%. As a FYI, VLCCs are among the largest oil tankers in commercial service, typically carrying around 2 million barrels of crude oil.

The important point isn’t simply the cost of the tanker. Transportation is part of the delivered cost of crude oil, so this extraordinary increase will ultimately be absorbed somewhere along the supply chain by producers, refiners, distributors, and/or consumers.

As I’ve mentioned in many blog posts when discussing inflation, this is particularly important because the Fed’s action to raise interest rates does little to solve this problem. The Fed can restrain demand, but it cannot manufacture tankers, increase shipping capacity, reopen constrained/blocked shipping routes, or reduce geopolitical risk. This is another example of supply-driven inflation, rather than excessive consumer demand.

Furthermore, there is potentially an important lag in its effect on the U.S. economy. Even if crude oil prices stabilize or fall, dramatically higher transportation costs can continue working their way through producer prices and ultimately consumer prices. That makes tanker rates another factor worth watching alongside the prices of oil, diesel, and gasoline on inflation expectations and potentially higher U.S. interest rates. Is the current energy shock becoming embedded in broader U.S. inflation? If so, a Fed Funds rate increase of >25 bps will be absolutely necessary.