Middle East Oil Flows Rebound to Near Pre-Conflict Levels
Diversified transport routes and military escorts bolster oil exports despite ongoing tensions.
Middle East oil exports have recovered to approximately 92% of their pre-conflict levels, according to data from maritime intelligence firm Kpler. This rebound comes seven months after the onset of hostilities led to significant disruptions, particularly through the Strait of Hormuz. Analysts attribute this recovery to a combination of factors including US military escorts for vessels, the use of shuttle tankers for ship-to-ship transfers, and the increased utilization of pipelines to bypass the strait.
Despite these recovery efforts, concerns persist regarding the long-term sustainability of these measures due to the risk of escalating tensions and potential shifts in US policy. Oil exports from Iran, in particular, have come to a near standstill following the re-imposition of a US naval blockade in July, dropping from 1.7 million barrels per day before the conflict to minimal levels. This blockade has left numerous Iran-flagged tankers stranded off the coast of Sri Lanka.
US Military Assistance and Ship-to-Ship Transfers
The US military has played a role in supporting maritime traffic, primarily through air support and issuing warnings to ships traversing the Strait of Hormuz. Data indicates a one-third increase in vessels assisted by US forces in September compared to August. However, commercial shipping continues to face risks, with September recording the highest number of successful Iranian attacks on vessels since March. Security analysts note that while the US provides support, the fundamental risk of Iranian aggression remains.
A significant portion of the oil passing through the strait now relies on a "shuttle system" involving numerous large tankers. Kpler data shows that over 70% of crude oil transiting the strait in August was transferred to other vessels in the Gulf of Oman. Satellite imagery has captured these ship-to-ship transfers occurring off the coast of Sohar, Oman. Over four million barrels of oil per day were transferred this way in the week ending September 30, though the long-term viability of this method is questioned amid ongoing attacks.
Pipeline Diversification
To circumvent the Strait of Hormuz, oil-exporting nations have increased their reliance on overland pipelines. Approximately 40% of the region's total oil exports in September bypassed the strait, moving via pipelines to ports on the Red Sea or the Gulf of Oman, a notable increase from 17% prior to the conflict. Saudi Arabia's East-West Pipeline, for instance, is operating at full capacity, exporting over four million barrels per day to Red Sea ports.
Almost a quarter of all crude oil from the region is now being transported via pipelines to terminals along the Gulf of Oman, particularly in Fujairah, UAE. Experts suggest this increased use of pipelines may become the permanent norm, given the persistent geopolitical complexities in the region.
While crude oil flows have largely recovered, the export of liquified natural gas and refined oil products such as jet fuel remains significantly below pre-conflict volumes. Average daily exports of processed oil products through the Strait of Hormuz have fallen to less than a million barrels, down from 3.5 million barrels per day before the hostilities began.