Goldman Sachs Group Inc. analysts, including Yulia Zhestkova Grigsby, stated in a June 17 note that oil flows through the Strait of Hormuz are expected to recover to only about 70% of their pre-war levels. Before the conflict, approximately 20 million barrels of oil and products flowed through the strait daily. This expected normalization implies a 13-million-barrel-a-day increase in Hormuz flows from current levels.
During the recent conflict between the U.S. and Iran, which involved a dual blockade, crude shipments through Hormuz significantly declined. Regional producers like Saudi Arabia, the UAE, and Iraq increasingly utilized alternative infrastructure to bypass the chokepoint. Saudi Aramco boosted use of a cross-country pipeline to the Red Sea, the UAE tapped a pipeline to Fujairah, and Iraq sent oil to Turkey's Ceyhan port. Kuwait is also exploring pipeline alternatives with Saudi Arabia and the UAE.
Currently, visible flows through Hormuz are estimated at 1.3 million barrels per day, with an additional 1.6 million barrels from the Gulf of Oman, potentially linked to "dark crossings." Concurrently, 7.5 million barrels per day are moving through alternative routes such as the Red Sea port of Yanbu, Fujairah, and Ceyhan. The UAE has an ambitious plan to minimize its dependence on Hormuz by expanding eastern ports, with Minister of Foreign Trade Thani Al Zeyoudi stating they are "moving toward having zero Hormuz dependency."
Despite the conflict initially surging crude prices to a peak above $126 per barrel in late April, Brent futures have since retreated to below $78 per barrel. Goldman Sachs believes that the availability of ships will not constrain recovery, with about 860 million barrels of empty tanker capacity available. However, some shipowners may still be reluctant to send vessels through the Strait.
