Middle East oil exports have risen above levels seen before the start of the US-Israeli war with Iran in February, despite Tehran’s attempts to block the Strait of Hormuz and attack shipping.
The region’s crude exports exceeded pre-war levels for four days in the last week of September, reaching between 19.5 million and 22.5 million barrels per day (bpd), according to preliminary data from shipping tracking firm Kpler. Before the war, exports averaged around 18 million bpd.
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This increase in the region’s oil exports has so far been largely attributed to U.S. ships ferrying tankers out of the Strait of Hormuz, as well as increased ship-to-ship transfers that reduce the chances of being targeted by Iranian missiles and drones. At the same time, the fact that oil prices have remained high has been explained by analysts as the result of continued high insurance rates – driven by fears of Iranian attacks – and a market pricing in the possibility of a return to hot war.
But a senior Kpler analyst last week offered a different explanation for the rise in high-priced oil exports. Gulf countries, she suggested, could pay Iran to let their oil through – which could give Tehran a significant share of the cargo’s value.
Before the war, a fifth of global oil and natural gas exports passed through the Strait of Hormuz.
Does this explanation hold water and what does it mean for war and oil prices?
What did the Kpler analyst say?
Michelle Brohard, head of policy and geopolitical risks at Kpler, recently said some countries may pay Iran for passage through the Strait of Hormuz.
“I suspect a toll is being paid that allows these ships to pass safely,” she said last week in an interview with energy analyst Rory Johnston.
“I also suspect that these countries know that this is unsustainable from the point of view of the (ships) escorted by the United States, and also unsustainable if they pay Iran 10 percent of their cargo, or 20 percent of their cargo,” she added.
“So you start to see what I would call a race to get out as much as possible, as quickly as possible, before the war resumes.”
This claim has not been independently verified, and Brohard presented it as speculation rather than a conclusion supported by evidence.
But as early as March, the shipping journal Lloyd’s List reported that Iran’s Islamic Revolutionary Guard Corps (IRGC) had already imposed a “toll” system to control maritime traffic across the strait.
The Trump administration, throughout the war, has repeatedly said Iran would not be allowed to charge tribute as part of a possible deal with Washington.
The closure of the strait has sent global fuel prices soaring and strained agricultural sectors around the world.
What is traffic like in Hormuz?
Oil is increasingly leaving the Middle East, maritime trackers report.
In the last week of September, the seven-day average exceeded the roughly 18 million bpd recorded before the start of the US-Israeli war with Iran in February – the first time since the conflict began.
Kpler said crude exports outside Iran had also recovered to at least 16.5 million bpd on average during September.
The upward trend in oil exports continued through October. Iraq’s state-owned Oil Tanker Company announced Saturday that it had transported two million barrels of crude on a very large crude carrier (VLCC) across the Strait of Hormuz, in what its chief executive said was the company’s first such operation in decades.
According to Kpler, “40% now bypasses Hormuz, and most of the crude oil passing through the strait is transferred to tankers offshore,” much of it passing through pipelines from Saudi Arabia and the United Arab Emirates.
Export figures also include supplies transiting the Red Sea, which has become an increasingly important alternative to the Strait of Hormuz.
Additionally, Kpler’s figures exclude any vessels that may have crossed the main transit route with their automatic identification system transponders turned off to avoid detection.
Iran, however, disputes allegations that it has lost control of the waterway.
IRGC Commander-in-Chief Ali Fadavi said Sunday that only three to four million bpd were moving along a U.S.-supervised route and called the amount “negligible” compared to pre-war traffic.
Before war broke out seven months ago, the strait regularly saw about 125 large commercial ships a day, including oil tankers, gas carriers, bulk carriers and container ships.
Where are oil prices right now?
Oil prices fell slightly as Middle East exports recovered. Last week, the Group of Seven countries also announced their decision to release 100 million barrels of oil from their emergency reserves.
But crude oil prices remain significantly higher than pre-war levels. Brent crude was trading at around $101.59 a barrel on Monday, down 0.71 percent, while U.S. West Texas Intermediate crude fell 1.2 percent to around $90.05.
“Despite the region’s resurgence in exports, much will depend, in the longer term, on the security of energy supplies,” said Susannah Streeter, chief investment strategist at Wealth Club, noting that “the situation is still tense.”
“The Strait of Hormuz remains a major hotspot, with the attack on another tanker on Sunday fueling concerns about the potential for further disruptions to supplies, particularly if shipping companies become increasingly reluctant to risk sending ships through this crucial chokepoint.
On Monday, an oil tanker transiting the Strait of Hormuz was ordered by the IRGC to turn around or risk being targeted, according to the UK Maritime Trade Operations (UKMTO) group which monitors maritime traffic.
Does the Kpler analyst’s assertion have weight?
According to academic Abdul Khalique, while Kpler analyst Brohard’s speculation that a transit fee arrangement was in place might be “plausible,” it is better described as an “informal security mechanism rather than a formal maritime levy.”
“There is no public evidence to support the existence of a systematic, state-run Iranian toll system,” Khalique, director of the maritime center at Liverpool John Moores University, told Al Jazeera.
He said the United Nations Convention on the Law of the Sea (UNCLOS) protects transit passage through international straits, “making formal tolls legally dubious.”
Chris Beauchamp, chief market analyst at IG Group, told Al Jazeera that the scenario Brohard suspected was “partly” possible.
“Everything seems to be happening unnoticed in the Middle East, from US convoys to Iran quietly imposing tolls,” he told Al Jazeera.
In September, the US government also imposed sanctions on a digital assets company, BitBank, which it said had been used by Iran’s Hormuz Secure Maritime Services Authority – a body created by the country’s government to collect fees for the safe transit of ships across the strait – to transfer money to Tehran.
However, Beauchamp said the biggest challenge for oil exports now was what he called the “shipping problem.”
“The shuttle system in the Gulf does wonders for moving oil, but it requires a lot of ships, which has driven up freight rates while reducing supply beyond the region itself,” he added.
According to Beauchamp, Asian buyers also have to find crude further afield, which “extends transit times.”
“It used to be a supply story, now it’s about the underlying mechanics of shipping. While less exciting, it’s arguably much more important and trickier to solve,” he said.
“Ships aren’t built overnight.”
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