Captain Salaries Soar as Strait of Hormuz Becomes a 'Death Run'

Traffic through the Strait of Hormuz fell this week to its lowest level since July 23, while reports indicate crews are being paid large bonuses to make the perilous voyage through the Gulf.

According to the UK's Financial Times, some oil tanker captains can now earn a base salary of up to $100,000 — the top of a pay range that varies widely between shipping companies — plus a $50,000 bonus for each transit through the strait.

Data from Kpler shows the number of detectable ships crossing the strait has dropped to its lowest level in more than two months, with only seven vessels passing through the vital shipping lane last week. The figure is hard to pin down precisely because many small shuttle boats have switched off their positioning devices to avoid detection before transferring oil to larger ships waiting outside the strait.

Are oil exports still moving through the strait?

Yes. At least 16.5 million barrels of oil left the region last month, roughly in line with the pre-war average and excluding Iran, which is under a US naval blockade.

However, about 40 percent of those exports move through Saudi Arabia's East-West pipeline or via ship-to-ship transfers using small, undetected craft.

How dangerous is it for sailors?

Very dangerous. Attacks targeting vessels in the Strait of Hormuz continued over the past week.

On Wednesday night, the UK Maritime Trade Operations (UKMTO) agency reported casualties after multiple shells struck a ship sailing off the coast of northern Qatar.

After the US-Israeli war against Iran began in late February, Tehran all but closed the strait, with only a handful of vessels granted permission to pass. Iran has carried out attacks on ships that cross without its explicit authorization.

For its part, the United States has imposed a naval blockade on Iranian ports in response to Tehran's closure of the strait, while escorting some vessels through the shipping lane.

Last week, attacks on tankers in the strait reached their highest level since the war began, as regional oil producers tried to ramp up exports despite growing risks to crews and cargo.

Saul Kavonic, head of energy at MST Marquee, told Reuters: "The frequency of Iranian attacks on shipping is now at its highest since the war began, and is likely to rise further."

He added that "constrained product flows, extremely high logistics costs and the potential for Iranian escalation are keeping oil prices elevated."

How are oil prices moving?

Oil prices rose on Thursday morning, with Brent futures up $2.28, or 2.28 percent, to $102.28 a barrel at 04:27 GMT.

US WTI crude gained $1.66, or 1.88 percent, to $89.94 a barrel.

The move came despite a partial recovery in oil exports thanks to Saudi Arabia's use of alternative export infrastructure and an intricate ship-to-ship transfer system.

The East-West pipeline, which carries oil from fields in eastern Saudi Arabia to the port of Yanbu on the Red Sea in the west, plays a key role in this. However, the pipeline route has also come under threat and was forced to shut at times because of attacks by Iran-backed groups.

What incentives do sailors get for crossing the strait?

The Financial Times reported this week that oil tanker captains can now earn a base salary of $100,000, plus a $50,000 bonus per voyage, to make the dangerous crossing.

Overall, crews on each vessel can earn four to six times their usual pay.

On Monday, The Wall Street Journal reported that shipping firms are spending $30 million to $40 million on a round trip to move oil into and out of Hormuz via ship-to-ship transfers.

According to the paper, oil producers must now accept high costs to get crude out of the strait, while shipowners and individual sailors are reaping the best profits the industry has seen in decades. Many sailors willing to risk the trip come from India, the Philippines and China.

"A crew-supply company based in Shandong is even paying as much as $25,000 for a round trip as a bonus, according to sailors and recruitment advertisements seen by The Wall Street Journal. For oilers and cadets — junior members on commercial ships — $25,000 can amount to more than a year's pay," the paper reported.

How do vessels move through Hormuz?

Like the small shuttle boats moving in and out of the strait under the threat of attack, captains of larger ships and tankers must turn off lights and positioning equipment to make the voyage.

According to Bloomberg, which spoke to a captain on one of the shuttle vessels, his ship typically carries oil at night and receives strict instructions: no lights, no phones, only one radar switched on while crossing the strait.

Speaking to the outlet from the Philippines after three months of taking his ship through the strait, he said he and his crew navigated by the coastline and lighthouses, describing the work as "quite challenging."

After seeing a fire ahead during one voyage, the captain said he called the US Navy — which is helping ships avoid mines along the route through the strait — to warn of an attack.

He added that his most recent contract through the strait was shorter than usual because he knew the trip "would not be easy," but he still received several times his normal pay.

Another captain of a liquefied natural gas tanker told Bloomberg that his voyage began by tripping the breaker connected to the ship's positioning equipment to hide its location while moving along the coast of Oman.

Crew members also used sandbags to shield the main deck in case of a drone or missile strike.

According to the report, shipping industry executives estimate there is currently about a 5 percent chance of being hit while crossing the strait.