Standard Chartered Says Hormuz Oil Flows Are Far From Normal

Standard Chartered says Gulf crude and condensate exports rebounded to about 16.5 million barrels per day in September, roughly returning to pre-war levels, but only 60% of that volume transited the Strait of Hormuz versus 83% before the conflict. The bank says exporters have relied on pipelines, bypass ports and extensive ship-to-ship transfers to reroute flows, raising costs and stretching logistics capacity.

By AI Newsroom· Reviewed by Pranav, Founder & Editor-in-ChiefPublished 1 minute agoUpdated 1 minute ago0 views

Why It Matters

The recovery in physical flows reduces the likelihood of extreme supply shortages and eases some scarcity-driven price pressure, but the higher costs, longer voyages and constrained spare capacity mean the regional oil system remains vulnerable to further disruption. That combination alters market risk calculations and regional strategic dynamics, including Iran's diminished seaborne export role.

Key Facts

Estimated Gulf exports (Sept): ~16.5 million bpd (crude and condensate, excluding Iran)
Share crossing Strait of Hormuz: 60% in September vs 83% pre-war
Iran seaborne exports (Sept): Near zero, down from ~1.7 million bpd pre-war
Saudi exports (Sept estimate): ~6.9 million bpd (up from 2.45 million bpd in August)
Reported cargo discounts: Up to $9 per barrel for offshore Oman loadings to cover logistics costs

Standard Chartered reports that Gulf crude and condensate exports rebounded to about 16.5 million barrels per day in September, a level broadly comparable with shipments before the conflict. However, the bank highlights a major change in routing: only around 60% of those barrels passed through the Strait of Hormuz in September, down from about 83% prior to the war.

Exporters have adapted by using a mix of alternative infrastructure and more vessel-intensive logistics. Standard Chartered documents increased use of pipelines and bypass ports such as Fujairah and Red Sea routes, combined with substantial ship-to-ship (STS) transfers. Shuttle tankers are increasingly hauling crude through Hormuz to transfer cargoes in the Gulf of Oman, and a southern route along the Omani coast has grown in importance for such shuttle movements.

Those workarounds have allowed flows to recover, but at a material cost. The bank says STS capacity looks saturated, vessel utilisation is inefficient, voyage times have lengthened and freight and security expenses remain elevated. For Saudi Arabia, the dynamics illustrate both resilience and strain: estimated exports jumped to roughly 6.9 million bpd in September after they fell to 2.45 million bpd in August when the East-West pipeline was damaged, yet pipeline throughput remains below nameplate and exposed to further attacks.

The physical recovery has reduced the immediate probability of extreme shortage scenarios and should shave some scarcity premium from prices, according to Standard Chartered. Still, the bank warns the system now contains less spare capacity to absorb another major disruption. The tactical success in rerouting also changed regional dynamics: U.S. naval measures have pushed Iran's seaborne exports to near zero in September, cutting Tehran's ability to choke off flows through Hormuz but raising the risk of unpredictable military escalation as tensions persist.