Gulf Nations Find Workarounds for Oil Flow Amid Strait of Hormuz Disruptions

When Iran shut down the Strait of Hormuz at the start of the war, many feared that prices would skyrocket and crater the world economy. However, nearly seven months on, oil is expensive but not exorbitant, with analysts saying there's enough oil available to meet current global needs.

The Gulf nations quickly found alternative routes and reached for unused pipeline capacity when Iran began attacking ships in the strait. Saudi Arabia and other Gulf producers redirected their exports through pipelines like the East-West pipeline that carries oil to their Red Sea port of Yanbu.

When Iranian-backed Houthi rebels disrupted the Yanbu workaround in July, the Saudis shifted again by sending oil through the U.S.-guided corridor in the Strait of Hormuz. This 'dark shuttle' route has seen some 6 million barrels of oil per day pass through on average - around 40% of pre-war flows.

Analysts at Rystad Energy estimate that around 8 million barrels per day have been restored, but about 7 million barrels per day are still missing from pre-war flows. However, with global oil inventories being drawn down and demand falling due to the higher price, the market is 'very tightly balanced,' according to Rystad's Rahul Choudhary.

The workarounds are costly and may not be sustainable in the long term. Sending oil through alternative routes adds time and expense, with charter rates for supertankers reaching $1 million per day on Sept. 11.