Hormuz Strait Crisis Worsens as Oil Sees Temporary Reprieve

The Strait of Hormuz has not returned to normal despite US President Donald Trump's claims that it is open. Oil traffic through the strait increased by over 30% last week, but still represents only a fraction of pre-war levels. Before the war began on February 28, roughly 130 ships passed through the strait every day.

The Gulf Emergency Oil Network has helped to keep oil moving, with Saudi Arabia and the UAE using pipelines and shuttle tankers to transport crude oil around the disruption. However, these strategies are expensive, with prices reaching a record $647,000 per day for VLCCs transporting oil from Saudi Arabia to China.

The crisis is even more acute for liquefied natural gas (LNG), which cannot be easily moved through alternative pipelines or shuttled like crude oil. Qatar has largely halted LNG shipments through the strait since two vessels were attacked in July, and state-owned QatarEnergy has extended force majeure until November.