Oil prices surge due to US-Israel war on Iran, impacting automotive logistics and supply chains
Global oil prices surged to more than $120 per barrel in light of the US-Iran conflict, creating a knock-on effect for automotive logistics and supply chains around the world in terms of costs, with the possibility for further disruption to vehicle production and distribution long-term.
Source: AFP
On Monday (9 March), the price of crude oil soared to almost $120 per barrel, before dipping down again on Tuesday (10 March) to around $90 per barrel in light of the US and Israel's war on Iran.
The
rising energy prices, which are at the highest levels since 2022, are
increasing costs for logistics, pushing up FVL distribution costs for road transport,
rail and ocean and ro-ro logistics, and raising inbound logistics costs for
components moving to plants, leading to increased surcharges from logistics
service providers (LSPs).
While these costs are rising, there are increased bottleneck threats to
major logistics corridors. Automotive Logistics understands that due to the disruption, at least 11 pure car and truck carriers (PCTCs) have been caught up in the region, along with container ships.
The Strait of Hormuz is currently facing disruption
due to the conflict, while some vessels
have halted or rerouted shipments in the region. For automotive logistics,
this could mean longer shipping routes between Asia, Europe and the Middle
East, higher insurance premiums and war-risk charges, and further congestion at
alternative ports and routes, as we previously saw during
the Red Sea crisis.
Rising energy costs are likely to ripple through
energy-intensive upstream sectors such as steel and aluminium production and
battery materials processing.
Further down the line, the war could even have an influence
over EV demand, according to a report by S&P
Global Mobility, which said: “The duration of the war is the critical
factor, with potential impacts ranging from immediate supply chain disruptions
and rising fuel costs to long-term shifts in vehicle production and consumer
demand toward EVs.”
As a result of the disruption, the G7 will hold an emergency
meeting today (9 March) to discuss a joint release of petroleum from reserves.
Which OEMs are most at risk?
According to Bernstein Research, Toyota, Hyundai and Chery were the biggest automaker manufacturers serving the Middle East last year, selling 3m new vehicles in the region in 2025.
“Of the international (OEMs), Toyota, Hyundai, and Chery account for 17%, 10%, and 5% of the Middle East’s sales, respectively,” Bernstein said in a report.
The Association of European Vehicle Logistics (ECG) has
warned that LSPs won’t be able to reflect these rising costs immediately in
contracts, which often operate on quarterly updates for fuel price adjustments.
Given the current volatility in energy markets, this creates a growing time gap
between the fuel costs logistics providers must pay and the point at which
contracts allow those costs to be adjusted, according to the ECG.
Frank Schnelle, executive director, ECG said: “Fuel price
increases affect operating costs immediately. When adjustment mechanisms only
apply several months later, logistics companies are forced to absorb these
costs in the meantime, which can place considerable pressure on liquidity and
cash flow.”
The group’s recommendation to shippers and logistics providers
in the sector is to temporarily increase the frequency of fuel price reviews
during this market volatility.
“Finished vehicle logistics is built on long-term
partnerships between manufacturers and logistics providers. In times of
exceptional fuel price volatility, closer and more frequent coordination is
essential to ensure that sudden cost increases do not destabilise logistics
operations,” Schnelle said.
