Hormuz is open for crude, still shut for fuel and gas

Seven months after Iran effectively closed the Strait of Hormuz, crude oil is flowing out of the Gulf at close to pre-war rates. The recovery has not come from a deal. Washington rejected Iran’s latest offer to reopen the strait, and the US is sending more forces to the region. It has come from a patchwork of shuttle tankers, US naval escorts and pipelines that bypass the strait. That patchwork works best for crude. For refined fuels and liquefied natural gas, the strait is still mostly closed.

Crude is back, measured several ways

Kpler, the ship-tracking firm, told CNBC that crude transiting Hormuz reached a seven-day average of 13.5 million barrels a day (b/d) as of 28 September, matching the pre-war baseline. Total crude exports from the Middle East, including the Red Sea, reached a seven-day average of 19.5 million b/d. Monthly figures are lower. Kpler’s estimate for September, reported by Al Jazeera, is 16.3 million b/d of Middle East crude exports, the highest since the war began but about 3.2 million b/d below February, with about 9.7 million b/d through Hormuz itself. Saudi Arabia accounts for much of the rise; its exports went from about 2.4 million b/d in August to about 5.4 million in September.

The different numbers reflect different windows and the large share of ships sailing with transponders off. Windward, a maritime analytics firm, counted 55 AIS-visible transits between 16 and 23 September and says the true number is “almost certainly higher”; before the war 120 to 140 vessels crossed daily.

Fuel and gas lag far behind

Refined products are the weak point. Kpler puts product shipments through Hormuz at 677,000 b/d against 3.6 million b/d before the war; combined crude and product flows were about 80 per cent of the pre-war baseline. JPMorgan’s Natasha Kaneva said the crude market had “largely normalized even as refined product supplies remain constrained”. US diesel reached a record $6.53 a gallon in September, Al Jazeera reports.

LNG is further behind. S&P Global counted 19 LNG cargoes through the strait in September, 13 from Qatar and six from the UAE, the most since the war began; Kpler counted 21. Both compare with 15 in June. S&P’s Eric Yep said that if the late-September pace held, October transits could reach 25 per cent of pre-war levels. Kpler says LNG flows are still 80 per cent below February. Qatar has extended force majeure on long-term deliveries to Asia until November and to Europe until December, and the chief executive of Japan’s Jera, the world’s largest LNG buyer, said on 2 October that he did not expect Qatari supply back “soon”.

An improvised system near its limits

The recovery depends on logistics that were never designed for this volume. More than 70 per cent of the crude that crossed Hormuz in August switched tankers off the UAE or Oman, according to Kpler, and Windward estimates that about two-thirds of oil volume moves through ship-to-ship transfers. Vortexa says those transfer areas may have reached capacity: discharging a fully laden supertanker now takes five or six days. Bloomberg, carried by gCaptain, reports that the cost of hiring a supertanker has risen above $1m a day and that some transfers have moved to India’s Gulf of Kutch.

Pipelines carry more of the load. About 40 per cent of Gulf crude now bypasses Hormuz by pipeline, against 17 per cent before the war, Kpler says. Those routes are exposed too. A drone attack on Saudi Arabia’s East-West pipeline, which Saudi officials attributed to Iraqi militias, shut the Red Sea terminal at Yanbu for 17 days; loadings resumed on 28 September. On 1 October an unidentified projectile landed inside the Yanbu port area and caused a fire, and the terminal temporarily suspended operations, according to the security consultancy Vanguard Tech, cited by the Maritime Executive. France has pledged air defences for the site.

Attacks inside the strait continue. The UK Maritime Trade Operations centre reported three vessels struck on 29 September, including an ADNOC-operated supertanker, and another tanker hit and set on fire on 1 October. An Islamic Revolutionary Guard Corps spokesman said vessels crossing without permission would be targeted or hit a mine.

Diplomacy is stalled and forces are building

In late September Iran offered to reopen the strait within seven days if the US returned to the memorandum of understanding agreed in June, under which Washington would lift its blockade of Iranian ports. President Donald Trump rejected the offer, and The Wall Street Journal reported that he expects to resume bombing after the November midterm elections. CNBC reported on 2 October that a third carrier strike group and an amphibious force with 2,000 Marines are heading to the region. The US Treasury on 1 October sanctioned Iran’s auto and rail sectors, including suppliers in the UAE, Hong Kong, Türkiye and Indonesia, and Treasury Secretary Scott Bessent claimed that Iran had loaded no crude at all in September.

The pressure on Iran is visible in its own statistics. The Statistical Centre of Iran reported that GDP contracted by 10.1 per cent year on year between 21 March and 20 June, with the oil and gas sector down 26.4 per cent, according to Al Jazeera, which also puts twelve-month average inflation at 69.9 per cent in September. Markets, for their part, have priced in only part of the recovery: Brent fell 2.6 per cent to $102.59 a barrel on 29 September but was still heading for a gain of about 13 per cent over the month.

The recovering flows weaken Iran’s main lever. But as RBC’s Helima Croft told CNBC, the escort system is “very expensive” and “a huge U.S. military commitment”, and Gulf states do not see the patchwork as a substitute for an open strait. Three indicators will show whether the recovery holds:

• Product and LNG volumes through Hormuz in October, which matter more for consumer prices than crude.
• Ship-to-ship transfer times and supertanker rates, which show whether the shuttle system can absorb more volume.
• The pace of the US military build-up, which the Journal reports is due to be complete by November.

Sources

• CNBC — Crude oil exports through the Strait of Hormuz hit prewar levels, but fuel shipments remain constrained
• Al Jazeera — Is Iran losing its leverage over the Strait of Hormuz?
• The Maritime Executive — Three Vessels Struck in Strait of Hormuz as Iran’s Grip Loosens
• gCaptain (Bloomberg) — Tanker Congestion Shunts Vital Oil Transfers Farther From Hormuz
• The Maritime Executive — Video: Explosion and Fire Reported at Saudi Oil Port of Yanbu
• The Edge Malaysia (Reuters) — September LNG shipments through Hormuz hit highest since start of US-Iran war
• The National (Bloomberg) — World’s top LNG buyer sees Qatar supply disruption persisting into winter
• CNBC — U.S. to send third carrier group to Mideast as Trump warns of new Iran strikes