Middle Eastern oil producers, including Kuwait and Qatar, are significantly increasing covert crude shipments through the Strait of Hormuz, helping to maintain global oil prices between $80 and $90 per barrel. This comes despite fears of a much larger supply shock at the onset of the Iran war, which some analysts had predicted could drive prices to $150 a barrel. The current strategy involves ferrying oil through the Strait undetected, often with transponders switched off, to transfer barrels onto larger tankers waiting in the Gulf of Oman.
This “dark shuttle” trade, which has been ongoing for months, is now reportedly moving more than the market estimate of 4 million barrels per day. The US Energy Secretary Chris Wright noted that 9 million barrels per day crossed Hormuz over the previous seven days, which is almost half of the pre-war rate of approximately 20 million barrels per day. This covert operation is critical in keeping energy costs down globally, alongside pipeline workarounds, strategic stockpile releases, and reduced worldwide demand.
Countries like the UAE, Iraq, Qatar, and Kuwait are all participating in these shuttle arrangements, as evidenced by vessel-tracking data. The Abu Dhabi National Oil Co. (ADNOC) has continued its exports despite suffering attacks on 23 of its vessels, resulting in one fatality and 20 injuries. ADNOC has sold approximately 135 million barrels of crude and plans to deploy additional vessels to deliver energy, highlighting its commitment to global supply. Around 150 ships, compared to about 40 in January, are now positioned off Oman, many waiting to receive these covertly transported cargoes.
The large volumes of oil are reaching global markets through ship-to-ship transfers in the Gulf of Oman, acting as a crucial "safety valve." This method mirrors tactics previously used by Iran to circumvent sanctions, but is now being employed by other regional producers to bypass dangerous segments of the Strait of Hormuz. Ship-tracking data indicates that direct vessel traffic through the Strait has hit multi-month lows, with provisional data showing oil transits at about 5 million barrels per day on Monday, and a seven-day moving average of 6 million to 7 million barrels per day through August 23.
