$100,000 salary, $50,000 bonus: Hormuz risk sends tanker captains’ pay to new highs

Oil tanker captains sailing through the Strait of Hormuz are being offered as much as $100,000 a month, along with a $50,000 bonus for each crossing, as shipowners struggle to keep vessels moving through one of the world’s most dangerous energy chokepoints.

The extraordinary pay packages are being offered as Iran steps up attacks on shipping and Gulf oil producers seek to keep crude flowing through the strait, the Financial Times reported on Wednesday.

The rise in crew pay is part of a much broader increase in the cost of moving oil through Hormuz. Freight rates for cargoes travelling through the strait have climbed to about $1.3 million per day this week, compared with $20,000 to $50,000 a day last year, according to the FT.

Under normal conditions, tanker captains earn around $15,000 a month, while ordinary sailors can earn as little as $1,500. Crew members receive double pay while operating in the southern Red Sea and Gulf of Oman. During actual Hormuz crossings, ordinary sailors can receive four to six times their normal wages.

Most voyages through the strait are conducted as shuttle operations, with dedicated tankers making repeated trips. That allows crews to earn the higher rates for months, but also leaves them exposed to the continuing threat of missile and drone attacks.

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The risks have increased sharply in recent weeks. At least 14 attacks have taken place in the Hormuz area since 20 September, according to maritime security company Vanguard, including four vessels struck since Saturday, the FT reported.

The International Maritime Organization has recorded at least 93 ships being hit since the conflict began on 28 February, with 24 seafarers killed, according to the FT.

Freight and insurance costs surge

Crew wages are only one part of the rising cost of moving Gulf crude.

A typical very large crude carrier can transport about 2 million barrels of oil and has a crew of up to 35 people. Entering the Gulf, loading crude and exiting again typically takes about four days.

Only a limited number of vessels are currently willing to make the voyage. Some tankers carry crude to waters off Fujairah in the Gulf of Oman, where cargo is transferred to other vessels for onward delivery.

Shipowners are also paying sharply higher war-risk insurance premiums. According to insurance brokers cited by the FT, tankers operating in the region are paying premiums equivalent to 6 to 10 per cent of the value of the ship’s hull. For a supertanker, that can mean as much as $20 million for a voyage into the Gulf.

Fuel is adding to the pressure. The price of fuel oil typically used by supertankers at Fujairah reached $686 per tonne on Monday, up 67 per cent from a year earlier, according to price-reporting agency Argus.

The result is a sharp increase in the cost of transporting each cargo even before the crude reaches its final destination.

Seafarers face a difficult choice

The higher wages are meant to compensate crews for the risks, but some seafarers say the additional money does not necessarily mean the voyages are voluntary.

Manoj Yadav, secretary-general of the Forward Seamen’s Union of India, told the FT that shipowners were offering large pay packages but, in some cases, pressuring crew members who did not want to sail through the danger zone.

Scott Bergeron, executive director of cargo shipping company Oldendorff Carriers, told a UK shipping conference that ships and their crews were being targeted and that this had become a new reality for the industry.

Most vessels are now travelling through Hormuz at night, with GPS signalling equipment switched off to reduce the risk of being targeted. The US Navy has also deployed defensive air capabilities near the route along the Omani coast.

Windward estimated that only 13 vessels travelled through the strait on 4 October, down from 24 a week earlier. Before the conflict, around 135 vessels passed through Hormuz each day, carrying about one-fifth of the world’s oil and liquefied natural gas supplies.

Why Hormuz matters for oil prices

The disruption has not completely stopped Gulf oil exports. Kpler data cited by the FT showed that overall oil flows from the Gulf had recovered close to pre-conflict levels, although flows through the Strait of Hormuz itself remained about one-third below pre-war levels. Some volumes have been diverted through pipelines and other routes.

But keeping those flows moving now requires substantially higher payments to crews, shipowners, insurers and fuel suppliers.

That makes the security situation in Hormuz an increasingly important variable for the global oil market. If attacks intensify or fewer crews are willing to make the crossing, the cost of transporting Gulf crude could rise further even without a comparable fall in oil production.