The ongoing Iran war, which began on February 28, has severely impacted oil exports from the Persian Gulf, with Tehran declaring the Strait of Hormuz effectively closed. Initially, market estimates, such as those from the International Energy Agency, projected a massive 14 million barrels per day reduction in Gulf supply, representing about 14% of global supply. However, actual reductions are proving to be much smaller, with trading firms now estimating a more moderate decrease of 5 to 6 million barrels per day. This discrepancy is attributed to producers finding various methods to continue crude exports. Kpler data indicates that approximately 136 million barrels of non-Iranian crude, or about 1.9 million barrels per day, passed through Hormuz and Gulf of Oman export channels between early April and June 10, significantly contributing to the market's stability compared to initial fears.
Various strategies have been employed to circumvent the Strait of Hormuz closure. Some tankers have "gone dark" by turning off their satellite systems, making them difficult to track. Roughly one-quarter of the 109 large oil tankers trapped inside the Gulf at the start of the conflict, specifically 29 vessels capable of carrying 700,000 barrels or more, have successfully exited the chokepoint. Additionally, countries like Iraq, Kuwait, and the UAE have been exporting large quantities of crude using these alternative logistics, sometimes in coordination with Iran and other times independently. For instance, Iraq's exports are estimated to be down 2.5 to 3.0 million barrels per day, Kuwait's by about 1.5 million, and Saudi Arabia and the UAE by approximately 0.5 million each. Saudi Arabia has also been shipping 4 to 5 million barrels per day from its Red Sea port of Yanbu as an alternative.
These ongoing exports, coupled with other market factors, have prevented oil prices from surging as initially predicted. External influences include a rise in U.S. oil exports, a substantial 400-million-barrel release from international emergency stocks, and a decrease in Chinese demand. Rapidan Energy Group estimates that about 2 million barrels per day of oil and related products are currently flowing out of the Gulf. This, combined with the other factors, has helped cool the market, leading to a nearly 30% drop in oil prices from their peak at the height of the war. Despite existing U.S. inventories of 351 million barrels in key hubs, S&P Global Energy warns that a drop below the "danger zone" of 325 million barrels could make the market vulnerable to logistical bottlenecks and price spikes.
