Gulf Oil Exports Surge Past Pre-War Levels Amid Heightened Strait of Hormuz Threats

Gulf oil exporters reached export levels exceeding pre-war figures for approximately half of September, according to shipping data. However, a recent increase in attacks on tankers and existing logistical challenges create uncertainty about the sustainability of these higher export volumes.

Ships navigating the Strait of Hormuz are currently facing a "heightened and increasingly unpredictable kinetic threat" due to a sharp rise in maritime traffic, stated Marisks, a shipping intelligence service. The seven-day average for crude exports from the Gulf region stood at 18.3 million barrels per day as of September 30, with data indicating that volumes surpassed pre-war levels on 14 days during the month.

These exports include oil routed through the Red Sea and shipments originating from terminals and ship-to-ship transfers in the Gulf of Oman. Earlier in the year, shipments had matched or exceeded pre-war levels on several days in June and July, following a memorandum of understanding between Washington and Tehran that has since expired. In the 12 months prior to the recent conflict's commencement, crude exports from the region averaged approximately 18 million barrels per day.

The surge in recent exports has been largely attributed to Saudi Arabia increasing its shipments from both the Red Sea and the Gulf. This occurred three weeks after an attack on its East-West pipeline on September 10. The increased demand for supertankers to transport crude through the Strait of Hormuz has reportedly pushed ship-to-ship transfer capabilities in the Gulf of Oman to their limits.

Iraq's state-owned Oil Tanker Company and several refiners have chartered tankers to load Basrah crude within the strait. This development follows Baghdad's August authorization from Iran for Iraqi oil tankers to transit through Hormuz.

Shipping data provider Vortexa reported a recovery in Gulf flows, noting that the 14-day average for Middle East crude and condensate exports reached 18.6 million barrels per day, surpassing the 10-year seasonal average and returning to pre-conflict levels. "Most of this month-over-month increase seen in September comes from Saudi Arabia, which is ramping up exports to regain market share from other Middle Eastern countries," said Xavier Tang, a senior market analyst. He added that the increased Middle East supplies are expected to help alleviate tightness in the oil market, particularly for Asian refiners.

Furthermore, liquefied natural gas cargoes exiting the Strait of Hormuz also saw an increase in September, reaching their highest volume since February.

Ship Attacks Continue

Despite the rise in exports, attacks on tankers have persisted. Marisks reported at least seven incidents in the past week. On October 1, the very large crude carrier (VLCC) Kazimah III was struck by an unidentified projectile while in the Strait of Hormuz, resulting in a fire onboard. The Kuwait Oil Tanker Company, the vessel's owner, has not commented on the incident.

Marisks also reported that on October 4, the Liberian-flagged Aframax tanker Lipsi was hit by an unknown projectile northeast of Jazirat Um Al Fayarin, Oman, within the Strait of Hormuz, causing damage to its engine room. The manager of the Lipsi, Dynacom, has not yet responded to requests for comment.

The United Kingdom Maritime Trade Operations agency has logged at least one attack per day in the Strait of Hormuz or the Gulf of Aden since October 2. Marisks suggested that these incidents may not indicate deliberate targeting of specific vessels. Instead, the available information points to the possibility that Iranian forces might be launching missiles into a designated engagement area. Weapons could potentially acquire and track radar signatures within this zone.

Prior to the conflict's start, the Strait of Hormuz typically accommodated around 125 large commercial vessels daily, including tankers, gas carriers, bulkers, and container ships. This waterway accounts for approximately 20% of global crude and LNG supply.