Crude exports from major Middle Eastern producers, including Saudi Arabia, Iraq and the United Arab Emirates, via the Strait of Hormuz and alternative routes rose to about 13 million barrels per day from the start of September, their highest total since February, when the region exported nearly 19 million barrels per day, according to data from ship-tracking company Hawkes.
Ship-tracking company Kpler estimated that volumes transported through the strait and alternative routes through last week had reached just under 80% of the region’s prewar flows. The recovery came as the US Navy and Gulf oil-producing states became better able to repel or avoid Iranian attacks, allowing more tankers to pass.
East-West pipeline resumes as alternative routes come under pressure
Saudi Arabia resumed pumping crude through the East-West pipeline after it came under attack and transporting it aboard tankers in the Red Sea, but volumes remained low, according to officials familiar with the operations, who said some of the current production would be directed to domestic refineries.
Saudi Arabia had transported crude across its territory to the Red Sea, while the UAE used a pipeline linking oil-producing areas in Abu Dhabi with the port of Fujairah on the Gulf of Oman. The two routes did not close the supply gap after the war began, contributing to higher oil prices and increased gasoline and diesel costs for US consumers.
Earlier in September, strikes by drones launched from Iraq shut down Saudi Arabia’s East-West pipeline, while Houthi threats increased shipping risks in the Red Sea, prompting Saudi Aramco to redirect larger volumes of oil toward the Strait of Hormuz.
Iranian crude stocks outside the blockade decline
Iran has been unable to transport crude through the Strait of Hormuz since the United States reinstated its naval blockade in July. Kpler estimated that Iran’s oil stocks outside the blockade’s range could run out by mid-October, threatening a vital source of revenue amid sanctions and the war.
The volume of Iranian crude aboard vessels outside the blockade’s range, which continues to generate revenue for Tehran, has fallen to about 15 million barrels from 29 million at the beginning of September. Kpler expects these volumes, most of which are headed to China, to run out by early or mid-October if the current delivery rate continues.
Iran has no comparable route to bypass the strait, as newly loaded crude remains stranded behind the US blockade at the entrance to the Gulf. Analysts estimate that trucks can transport no more than 40,000 barrels per day, compared with exports of nearly 2 million barrels per day before the war.
US Treasury Secretary Scott Bessent said the day before yesterday, Sunday: “Most likely, over the next two weeks, they will deliver their last oil shipments to China, and after that they will have nothing left.”
Negotiations and escalation risks
Iran and the United States reached an understanding last June that included immediate financial relief in exchange for reopening the waterway, but it collapsed after Iran began attacking commercial vessels in the strait. The United States reinstated its blockade of Iranian ports in July while stepping up efforts to help vessels from other countries transit Hormuz.
US President Donald Trump rejected a new Iranian ceasefire proposal last Friday that would have allowed the strait to reopen and ended the US blockade of Iranian ports for 7 days to make way for negotiations.
Iran’s Supreme Leader Ayatollah Mojtaba Khamenei referred to “the defenders of the Strait of Hormuz” in a statement issued in his name yesterday, Monday, signaling that Tehran continues to treat control of the waterway as a means of pressuring the United States and its allies.
This shows that Iran’s approach in Hormuz is becoming less effective. That could lead to a more explosive dynamic, forcing it to provoke or decide to ignite a larger conflict itself in order to escape this predicament.
Although the recovery in exports has eased pressure on oil prices, renewed disruption to energy flows from the Middle East could restore upward pressure on prices. Hamad Hussein, chief economist at Capital Economics, said: “In the absence of a decisive end to the conflict, oil price risks will remain skewed to the upside.”
Temporary calm in the Strait of Hormuz
The United Kingdom Maritime Trade Operations agency reported the day before yesterday, Sunday, that there had been no confirmed attacks or disruptions in the strait during the previous 72 hours, although the threat level remained high. The agency’s last recorded attack in the strait was on September 23, despite recent reports in Iranian media confirming that attacks were continuing.
Analysts believe the pause in attacks may have been an attempt to test President Trump’s willingness to reach an agreement during last week’s United Nations General Assembly meetings, with the decline in attacks potentially representing a temporary lull.
