Middle Eastern oil producers are successfully moving large volumes of crude out of the Persian Gulf, which is helping to control prices and alleviate concerns about an energy-driven inflation spike, even as the Iran war continues. These covert shipments are playing a significant role in stabilizing the global crude market.
The US military has been instrumental in this effort, aiding the passage of over 660 million barrels of crude oil through the Strait of Hormuz since early May. This assistance extends to approximately 1,300 commercial vessels during the same period. While current shipments of about 7 million barrels per day through the strait are still below the pre-war level of 20 million barrels per day, they indicate a substantial flow of oil despite Iranian threats and attacks. Independent firms like Windward estimate crude oil exports through Hormuz averaged 5 million barrels per day in July, up from 4 million barrels per day in June and 1.6 million barrels per day in May, with August expected to see further increases.
Despite a US naval blockade and Iranian demands for vessels to use a northern route, a significant number of ships are defying these pressures. Data from Kpler for August 1-19 shows 112 vessels carrying oil, LPG, and LNG passed through Hormuz. Notably, 21 openly used the Iranian route, while only two formally used the Omani route. The majority, 89 vessels, used "dark" or unclassified routes, highlighting the covert nature of many transits. For all vessel types, 35% openly used the Iranian route, and only a handful used other routes publicly.
The high risk of these operations is met with high rewards. Tankers making the journey can earn $500,000 per day, with sailors receiving double or triple their usual pay. This financial incentive, coupled with US military protection for Gulf states, encourages producers to maximize their oil exports through the strait, countering the impact of the ongoing conflict on global energy markets. The US Energy Secretary Chris Wright noted that many private businesses undercount ships due to covert movements, while oil prices have fluctuated, with Brent crude reaching $92.9 per barrel after a ceasefire and MoU, but remaining elevated compared to pre-war levels of about $66 per barrel.
