Covert Oil Shipments Keep Prices in Check Amid Ongoing Conflict

Oil producers in the Middle East have been secretly shipping crude through the Strait of Hormuz, keeping prices in check despite ongoing conflict. The ships navigate the waterway with their transponders turned off and then transfer the oil to tankers in the Gulf of Oman. According to Bloomberg, these covert shipments exceed market estimates of 4 million barrels per day.

Before the war began, about 20 million barrels of oil passed through the Strait daily, roughly one-fifth of global shipments. U.S. Energy Secretary Chris Wright stated last week that 9 million barrels per day had passed through the strait over the previous seven days.

The impact of these shipments on prices is significant. Brent crude futures have traded within the range of $80, $90 per barrel for most of August, below initial market expectations of $150 per barrel at the start of the conflict.