Hormuz Shuttles Keep Oil Flowing, But at a Steep Price
The Strait of Hormuz, a critical chokepoint for global oil supplies, has seen a significant increase in exports despite ongoing tensions in the region.
A new shuttle tanker system, developed by Abu Dhabi National Oil Company (ADNOC), is allowing producers to transfer crude from Gulf terminals to safer waters in the Gulf of Oman, where it can be loaded onto larger ships for onward journey to refineries in Asia.
This workaround has maximized the use of a limited and expensive tanker fleet and allowed at least some vital exports to continue. According to Kpler data, exports through Hormuz have reached around 6.5 million barrels per day (bpd) so far in September, the highest since the brief spike after the June ceasefire.
The emergence of this floating logistics network has helped prevent a far more severe supply shock, but it comes at a steep price. Benchmark freight rates for a very large crude carrier (VLCC) transporting Gulf crude to China have surged in recent months to above $30 per barrel, by far the highest level on record.