Iran Attacks Disrupt Oil Flows Through Hormuz Strait

Iran has escalated attacks on commercial ships passing through the Strait of Hormuz, the Persian Gulf, and waters off Oman. In the last month, nearly 20 vessels have been targeted, mostly oil tankers. Michelle Wiese Bockmann, a senior maritime intelligence analyst at Windward, reports that Iran struck roughly 2% of all vessels transiting the strait during the third quarter.

Despite the risks, oil continues to flow through the region, thanks in part to a U.S.-military protected corridor along Oman’s coast. However, the situation remains fragile. To reduce exposure, tankers often transfer oil to additional vessels in the Gulf of Oman before proceeding to Asia. This relay system increases the number of ships needed but limits individual vessel risk. Kpler, a firm tracking tanker movements, notes that daily oil flows fluctuate, sometimes matching prewar levels but often falling short. In the past week, flows averaged 10.3 million barrels per day, 23% below the prewar baseline of 13.5 million.

The human and financial toll of these attacks is severe. At least nine sailors have died since July, with 18 wounded and three still missing. Rising maritime risks have driven up freight and insurance costs, with daily rates for crude carriers from the Persian Gulf to China now exceeding $1 million per ship. Richard Meade, editor in chief of Lloyd’s List, attributes the continued oil flow to market participants accepting higher costs and operational complexity. Brent crude prices hover near $100 per barrel, reflecting ongoing supply constraints.

Analysts warn that the current arrangement is unsustainable. Bob McNally, president of Rapidan Energy, argues that prices remain elevated due to the high costs of transporting, insuring, and delivering crude. The U.S. military’s role in securing the corridor and Iran’s continued claims over the strait add to the uncertainty. On Monday, Iran’s Revolutionary Guard threatened a tanker transiting the strait, reinforcing the persistent dangers in the region.