The flow of crude from the Persian Gulf has returned to near pre-war levels, but the latest data shows that much of the oil is reaching markets through routes and transportation arrangements that did not exist before the war, raising questions about whether Iran is losing influence in the Strait of Hormuz.
At least 16.5 million barrels of crude per day left the area between September 1 and 28, which is the pre-war average when Iran is excluded, according to commodities analytics firm Kpler.
But even as crude levels have risen, the refinery bottleneck that caused a global surge in diesel prices persists. European Union figures released on October 1 show that diesel prices at the pump have reached record levels. Prices also jumped in the United States despite the recovery in oil exports.
In the meantime, the course has changed radically.
Before the war, 83 percent of the region’s crude oil passed through the Strait of Hormuz. By September, 40 percent had bypassed the strait, with oil moving by pipelines and other routes through Saudi Arabia and the United Arab Emirates. About 60 percent, or 9.9 million barrels per day, physically passed through Hormuz.
Kpler said more than 70 percent of the crude that passed through the strait in August – the most recent month available – moved on tankers off the Gulf of Oman, underscoring how far the current system is from normal commercial shipping.
For Iran, the recovery is a sign that its ability to disrupt the waterway has been significantly degraded.
Mohammad Ghaedi, a professor at George Washington University, told RFE/RL’s Radio Farda that the current level of traffic was already too high for Tehran and “unacceptable” for local authorities.
But these figures do not mean that Iran has simply lost control of Hormuz. Tehran has never officially controlled the strait. Rather, its influence rests on its ability to make passage dangerous, forcing shipping companies to weigh the risks and costs of entering the Gulf.
That capability appears to have weakened as U.S. forces provide protection for commercial shipping and companies develop ways to transport oil while limiting their exposure to the strait.
Ellen R. Wald, an author and energy markets analyst, told RFE/RL that Iran’s “ability and/or willingness to attack ships in the Gulf is declining,” allowing ships to transit under U.S. military cover.
But she warned that the resumption of flows should not be confused with a return to normal.
Some shipping companies accept significant risks to move oil efficiently through the strait to larger tankers waiting outside the Gulf. Others operate without insurance or in particularly difficult conditions.
“This is not a return to normal,” Wald said. “These are significant risks and carry high costs.”
And this is why oil prices are not falling much despite the increase in oil flows.
war bounty
The rebound in crude flows has eased some of the immediate pressure on global supplies, but Wald doesn’t yet expect oil prices to return to pre-war levels. The continued threat to ships, high insurance costs and reliance on US military protection mean that a “war premium” remains anchored in the price of oil.
Kpler’s latest figures also show why the recovery of exports should not be confused with the restoration of the old Gulf oil trading system.
Before the war, almost all of the region’s crude exports depended on Hormuz. Now pipelines, Red Sea routes and offshore ship-to-ship transfers are helping producers get around the choke point. Kpler said the region’s export system had effectively been rebuilt around the disruptions.
The more oil flows unstopped, the weaker Tehran’s ability to use Hormuz as a coercive tool is. But the extraordinary measures needed to keep that oil flowing also demonstrate that the Strait remains a source of leverage.
Ghaedi said he did not believe Iran was likely to attack regional energy infrastructure, despite Tehran’s comments that this attack could be escalated by targeting oil facilities. He argued that reports depicting Iran as having lost control of Hormuz could themselves risk provoking such a response.
But for now, the evidence points to a gradual erosion rather than a complete disappearance of Iranian influence. And as long as ships still require military protection, unusual routes and costly workarounds to transport that oil, Hormuz will remain a vulnerability for Washington, even if Iran is no longer able to exert the same degree of pressure on it as at the height of the war.
By RFE/RL
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