Iran Is Losing Some of Its Leverage Over the Strait of Hormuz

Commodity analytics firm Kpler reports that at least 16.5 million barrels per day of crude left the Persian Gulf between Sept. 1 and 28, a level comparable to prewar averages when Iranian exports are excluded. The rebound indicates that regional output and shipments have largely recovered in aggregate, but the pattern of trade has shifted markedly from the pre-conflict era. Before the war, roughly 83 percent of the region's crude transited the Strait of Hormuz. In September, about 40 percent of exports bypassed the strait by using pipelines and alternative routes through Saudi Arabia and the United Arab Emirates, leaving about 60 percent (9.9 million bpd) physically crossing Hormuz. Kpler also noted that more than 70 percent of the crude that did cross the strait in August was transferred between tankers offshore in the Gulf of Oman, underscoring how current operations differ from normal commercial shipping. Analysts and regional observers see the evolving logistics as weakening Iran's ability to impose a de facto blockade by making the waterway dangerous. U.S. naval protection for commercial vessels and the adoption of ship-to-ship transfers, alternate pipelines and Red Sea routes have reduced the immediate impact of threats to Hormuz. Still, experts caution that this is not a return to normal: many shipments now involve elevated insurance costs, riskier operations, and vessels running without typical coverage or under difficult conditions. The operational and security frictions help explain why oil and refined-fuel prices have not fallen in lockstep with the recovery in crude flows. European Union data published Oct. 1 showed diesel pump prices at record levels, and U.S. prices have also risen despite higher exports. Analysts say a ‘‘war premium’’—driven by ongoing threat perceptions, protection requirements and higher logistics costs—remains embedded in oil markets even as the Gulf export system adapts.