The ongoing conflict in the Strait of Hormuz is increasingly being characterized as a stalemate, drawing comparisons to the war in Ukraine. Despite Iran's ability to disrupt shipping, it cannot completely halt oil flows from the Persian Gulf, while the US cannot fully restore normal shipping conditions. This unusual situation is described as a "Hormuz paradox" by analysts, where enough crude oil is reaching global markets to prevent a severe energy shock, yet Iran continues to generate revenue and maintain its leverage through the threat of attack. This balance is reducing the urgency for either side to compromise, potentially prolonging the war.
Before the war, approximately $20 million barrels per day (bpd) of oil were exported from the Gulf region. Currently, an estimated $15 million bpd are leaving the Gulf, including shipments through Hormuz and via pipelines. While some ship-tracking companies estimate lower volumes, the continued flow of oil, even through ship-to-ship transfers in the Gulf of Oman and "dark" transits with transponders off, indicates that Iran is not experiencing a complete economic blockade. This sustained, albeit reduced, oil revenue for Iran lessens the pressure on the regime to seek a settlement.
The disruption in the Strait of Hormuz has significantly impacted shipping traffic. Prior to the war, around eight Very Large Crude Carriers (VLCCs) traversed the strait daily; this number has since dropped to an average of two to three VLCCs per day since July 7. Overall commodity carrier traffic, which averaged 95 transits per day before March 1, fell to an average of 10 daily transits after Iran restricted the waterway, and settled around 15 per day after hostilities resumed in July. The threat of attack alone is enough to deter many operators, even without a physical closure of the strait.
Oil prices have reacted to the uncertainty, with Brent crude nearing $94 per barrel after jumping $2.40 on Thursday. This increase, alongside a 2.5% rise in US benchmark West Texas Intermediate to around $86, highlights the market's nervousness despite the ongoing oil flows. Analysts like Dan Alamariu of Alpine Macro suggest that barrels getting through Hormuz increase the odds of a longer war, potentially extending deep into 2027, as neither side feels an urgent need for a resolution if oil markets remain moderately stable and Iran can sustain its regime. The US Energy Secretary Chris Wright has indicated that up to $15 million bpd are leaving the Gulf, encompassing both Hormuz and pipeline shipments, underscoring the ongoing, albeit constrained, oil egress.
