Key facts
- Crude oil exports from the Persian Gulf reached 16.5 million barrels per day between Sept. 1-28, matching pre-war levels.
- In September, 40% of regional crude bypassed the Strait of Hormuz, utilizing pipelines and routes via Saudi Arabia and the UAE.
- Over 70% of crude crossing Hormuz in August underwent offshore transfers in the Gulf of Oman.
- US forces are providing protection for commercial shipping in the region.
- Shipping companies are incurring significant risks, high costs, and operating without insurance to ferry oil through the strait.
The flow of crude oil from the Persian Gulf has recovered to near pre-war levels, but data indicates a significant shift in shipping routes, raising questions about Iran's diminishing leverage over the Strait of Hormuz. Commodity analytics firm Kpler reported that 16.5 million barrels per day of crude left the region between September 1 and 28, matching the pre-war average when Iran is excluded.
However, the way oil is reaching markets has changed dramatically. Before the war, 83% of the region's crude crossed the Strait of Hormuz. In September, this figure dropped to 60%, or 9.9 million barrels per day, with 40% bypassing the strait through pipelines and other routes via Saudi Arabia and the United Arab Emirates. Furthermore, Kpler data shows that over 70% of the crude that physically crossed Hormuz in August underwent offshore ship-to-ship transfers in the Gulf of Oman, indicating a departure from normal commercial shipping practices.
Analysts suggest this shift indicates a degradation of Iran's ability to disrupt the waterway. Mohammad Ghaedi, a lecturer at George Washington University, stated that the current level of traffic is already too much for Tehran and "unacceptable" to authorities there. Ellen R. Wald, an energy markets analyst, noted that Iran's "ability and/or will to attack ships in the Gulf is declining," partly due to US military protection for commercial shipping and companies developing alternative oil movement strategies.
Despite the recovery in flows, a return to normalcy is not yet evident. Some shipping companies are accepting significant risks, operating without insurance, or facing unusually difficult conditions to ferry oil. Wald cautioned that these "significant risks and come with high costs," contributing to a persistent "war premium" embedded in oil prices, preventing them from returning to pre-war levels.
The rebuilding of the region's export system around these extraordinary measures highlights that while Iran's ability to use Hormuz as a coercive tool may be weakening, the strait remains a vulnerability. Ghaedi believes Iran is unlikely to attack regional energy infrastructure, but reports portraying Iran as having lost control could provoke such a response. For now, the evidence points to a gradual erosion of Iranian leverage, with Hormuz remaining a vulnerability for Washington as long as ships require military protection and costly workarounds to transit.