A U.S.-protected shipping network and expanded pipeline operations have pushed Middle Eastern oil exports above levels recorded before the Iran war, even as attacks on commercial vessels drive transportation costs and insurance premiums sharply higher.
By yourNEWS Media Newsroom
Oil exporters in the Persian Gulf have restored shipments to levels exceeding those recorded before the outbreak of war with Iran, overcoming disruptions in the Strait of Hormuz through alternative pipelines, offshore cargo transfers and a temporary maritime transportation network operating under American military protection.
New shipping data show that Middle Eastern oil exports averaged more than 24 million barrels per day during the week ending Oct. 18, surpassing the prewar average of 23.3 million barrels. The recovery has occurred despite continued Iranian attacks on commercial vessels and mounting costs for shipowners willing to operate in one of the world’s most strategically important oil transportation corridors.
The figures, compiled by maritime intelligence firm Kpler and reported Wednesday by The Wall Street Journal, demonstrate how regional producers and shipping companies have adapted to restrictions imposed during the conflict.
Although Iranian forces continue attempting to disrupt maritime traffic, oil exporters have developed a combination of protected transit routes, short-distance tanker operations and alternative pipeline connections that has allowed shipments to recover without restoring normal conditions in the Strait of Hormuz.
Preliminary estimates indicate that approximately 14 million barrels per day moved through the strait or were transferred between vessels in nearby waters of the Gulf of Oman during the latest reporting period. That represented about 82% of the comparable prewar volume.
The broader regional recovery has been driven partly by Saudi Arabia and the United Arab Emirates, which have expanded the use of pipelines and export terminals that allow crude oil to reach international markets without passing through Hormuz.
Kpler estimated that approximately 40% of non-Iranian crude exported from the Persian Gulf traveled through routes bypassing the strait in September. Before the war, those alternatives accounted for approximately 17% of shipments.
The change has reduced producers’ dependence on a narrow waterway that Iran has repeatedly threatened to close, although the alternative routes do not eliminate the possibility of attacks on energy infrastructure or commercial shipping.
Hamad Hussain, a senior commodities economist at Capital Economics, said the recovery reflects the emergence of an established transportation system that companies have become increasingly willing to use despite the military risks.
“The big picture is that the system for shipping through a dangerous Strait of Hormuz is now well-established and the risk appetite of those involved in exporting oil has risen,” Hussain said.
The renewed export capacity marks a significant development in the economic consequences of the Iran war, which began earlier this year and disrupted one of the principal arteries of global energy trade.
The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea, providing access to international markets for oil producers including Saudi Arabia, Iraq, Kuwait, Qatar and the United Arab Emirates.
Before the conflict, large volumes of crude oil and petroleum products moved through the passage each day. Its geographic importance made shipping through the strait vulnerable to military operations, mines and attacks against commercial vessels.
Iran’s Islamic Revolutionary Guard Corps has attempted to exploit that vulnerability by targeting maritime traffic with drones, missiles and small-boat operations.
The attacks have forced shipping companies to reconsider routes, purchase increasingly expensive insurance and determine whether the financial returns from transporting Gulf oil justify the danger to vessels and crews.
Despite those conditions, the restoration of export volumes indicates that Iran has been unable to prevent substantial quantities of non-Iranian oil from reaching international markets.
The recovery has coincided with continued restrictions on Iran’s own petroleum shipments. A U.S. maritime blockade has sharply constrained Iranian oil exports, limiting Tehran’s ability to generate revenue while neighboring producers increase shipments through alternative transportation arrangements.
However, the improvement in physical supply has not produced a corresponding return to prewar oil prices.
International benchmark Brent crude traded near $108 per barrel Tuesday, reflecting concerns about additional disruptions, reduced global inventories and the expense of transporting energy supplies through a conflict zone.
Oil prices remain sensitive to developments involving Iranian military operations, American naval deployments and the security of export terminals and pipelines.
Even when sufficient crude reaches global markets, higher transportation costs can contribute to elevated prices for refiners and ultimately consumers.
The economic consequences extend beyond the price of the oil itself. Shipping companies must account for additional security measures, increased fuel consumption, longer routes, insurance charges and compensation for crews exposed to military danger.
Those expenses have become a defining feature of Gulf petroleum exports.
Kpler reported that the freight cost of transporting crude oil from the Persian Gulf to China aboard a supertanker approached $37.37 per barrel this week, near a record level.
War-risk insurance premiums have also increased sharply. Michelle Wiese Bockmann, a senior analyst at maritime intelligence firm Windward, estimated that insurance expenses have reached as much as 10% of a vessel’s value, compared with less than 3% previously.
The higher premiums reflect the possibility that tankers could be damaged, disabled or destroyed while navigating waters targeted by Iranian forces.
Shipping companies must absorb those expenses or pass them along through higher freight rates, increasing the total cost of delivering oil to customers.
Natasha Kaneva, head of global commodities strategy at JPMorgan, described the change in market conditions as a transition from supply shortages to transportation costs.
“In April, the problem was a shortage of crude. In October, it is the cost of moving it,” Kaneva said.
The dangers remain substantial despite the volume of oil continuing to leave the region.
Approximately 30 attacks on vessels have been reported during October, according to a Wall Street Journal tally based on information from the United Kingdom Maritime Trade Operations Centre and private maritime security companies.
Windward’s Wiese Bockmann estimated that October incidents represented approximately 20% of ships attacked during the entire conflict.
The increase suggests that Iranian forces have intensified their efforts to disrupt the shipping arrangements developed by regional exporters and the United States.
Christopher Long, a former British naval officer associated with maritime security company Neptune P2P Group, characterized the attacks as an attempt to restore Iranian control over commercial passage.
“Iran is trying to reassert its blockade of the strait,” Long said.
Iranian tactics have reportedly included unmanned aerial vehicles, missiles, rocket-propelled grenades and operations involving small civilian-style boats.
The Islamic Revolutionary Guard Corps has also used observers aboard fishing vessels and personnel operating on the water to identify or approach commercial ships.
Such operations allow relatively small groups of attackers to threaten large merchant vessels without requiring conventional naval engagements.
One example occurred Oct. 16, when the Tanzania-flagged supertanker Loyalty was struck by a rocket-propelled grenade fired from a small boat.
According to maritime security company Vanguard, the projectile damaged the vessel and punctured a freshwater tank.
A crew member said the ship was carrying approximately 2 million barrels of Iraqi crude oil at the time of the incident.
The tanker had previously transported Venezuelan oil to China before entering service on routes involving Iraqi crude. Since September, it had made repeated voyages into the Persian Gulf to load oil for export.
Its operations illustrate the temporary shipping arrangements that have developed as conventional tanker traffic faces heightened risks.
Rather than conducting a single long-distance voyage from an oil terminal to its final destination, some vessels now operate as shuttles between Gulf loading facilities and offshore transfer locations.
Tankers load crude inside the Persian Gulf, travel through protected waters near Oman and transfer their cargoes to other vessels before returning to collect additional shipments.
The arrangements allow larger quantities of oil to move toward international markets while reducing the need for every vessel to undertake the same high-risk passage.
Some tankers reportedly disable their automatic identification systems during portions of their journeys, making their movements more difficult to track publicly.
Those practices complicate the work of maritime security analysts and commercial ship-tracking services, which rely partly on transmitted vessel positions to calculate export volumes.
American military protection has become an important component of the transportation network.
Commercial vessels have reportedly traveled through portions of the strait under U.S. air cover, particularly along the Omani coast, where tankers can move through waters monitored by American forces.
The security arrangements do not guarantee safe passage, as demonstrated by recent attacks, but they provide an additional layer of protection for operators willing to accept the remaining risks.
The economic incentives for participating in the system are substantial.
Homayoun Falakshahi, Kpler’s head of crude oil analysis, estimated that traders could earn approximately $20 more per barrel by purchasing and reselling Iraqi crude than they could before the conflict.
For a supertanker carrying 2 million barrels, that increase could translate into approximately $40 million in additional trading revenue.
The potential returns have encouraged some traders and vessel operators to continue working in the region despite the threat of attacks.
“The volumes remain high despite rising attacks, because profits make it worth the risk,” Falakshahi said.
Crew members are also being offered higher compensation to accept assignments in the Persian Gulf.
The Wall Street Journal reported that one China-based ship-staffing company offered payments reaching $25,000 for a round-trip voyage that would ordinarily last approximately one or two weeks.
Such offers demonstrate the extraordinary financial incentives being used to recruit personnel for assignments that carry considerably greater danger than normal commercial shipping routes.
The compensation also reflects the difficulty of finding experienced crews willing to travel through waters where drones, missiles and small-boat attacks have become recurring threats.
Higher crew payments, security equipment, insurance premiums and potential vessel losses all contribute to the costs ultimately incorporated into petroleum transportation.
At the same time, expanded pipeline operations have provided exporters with opportunities to move crude without placing every shipment aboard a tanker inside the Persian Gulf.
Saudi Arabia operates an east-west pipeline network capable of moving oil from producing regions near the Gulf to terminals along the Red Sea.
The United Arab Emirates also maintains infrastructure connecting its oil-producing areas with export facilities outside the Strait of Hormuz.
Those systems have become increasingly important as producers seek to maintain access to international buyers while limiting exposure to Iranian attacks.
The additional routes have helped offset the continued reduction in traffic through Hormuz itself.
However, pipelines and alternative ports can also become targets during regional conflicts, leaving producers vulnerable to disruptions even when ships avoid the strait.
The current recovery therefore reflects a functioning transportation system under wartime conditions rather than a restoration of normal maritime commerce.
The conflict has also placed pressure on supplies of refined petroleum products.
Recent market reporting indicates that shipments of fuels such as diesel and other refined products remain below prewar levels even as crude oil exports recover.
That imbalance matters because additional crude supplies do not automatically eliminate shortages of finished fuels when refining operations, export terminals and transportation networks remain constrained.
Diesel is particularly important for freight transportation, agriculture, construction and industrial activity, making sustained price increases consequential for businesses and consumers.
For energy markets, the contrast between improving crude export volumes and persistently high shipping expenses has created a complicated outlook.
Producers have demonstrated that they can maintain substantial shipments under military pressure, but each additional attack raises concerns about whether those arrangements can continue operating safely and profitably.
The market must also account for the possibility of renewed disruptions to pipelines, export terminals or commercial vessels carrying large oil cargoes.
Continued military activity near Hormuz could quickly increase insurance premiums or discourage shipowners from accepting future contracts, even if no immediate shortage develops.
The latest export figures nevertheless demonstrate that regional producers have significantly reduced their dependence on uninterrupted access through the strait.
With daily shipments now exceeding prewar averages, Saudi Arabia, the United Arab Emirates and other Gulf exporters have adapted their operations to maintain international oil sales while Iranian forces continue targeting maritime traffic.
Iran retains the ability to threaten vessels and increase the cost of transportation, but the temporary shipping network has limited its capacity to prevent substantial quantities of oil from leaving the region.
The result is an energy market in which physical supplies have largely recovered while the financial and security burdens of moving them remain elevated.
As the conflict continues, the durability of that system will depend on the protection available to commercial vessels, the reliability of alternative export routes and the willingness of traders, shipowners and crews to keep operating despite the threat of further attacks.
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