Iran Conflict Disrupts Oil Supplies, But Workarounds Keep Prices Relatively Stable
The conflict between Iran and other nations has led to a significant disruption in oil supplies through the Strait of Hormuz, but thanks to alternative routes and spare capacity, global oil supplies remain sufficient.
When Iran shut down the Strait of Hormuz at the start of the war, it choked off sea passage for some 15 million barrels of oil per day. However, Saudi Arabia and other Gulf producers quickly found alternative routes, including the East-West pipeline that carries oil to their Red Sea port of Yanbu.
When Iran's militant allies targeted this route, the Saudis shifted again, sending oil through a US-guided corridor in the Strait of Hormuz, which has allowed some 6 million barrels of oil per day or more to pass through. This is roughly 40% of pre-war flows.
The workarounds have kept oil prices relatively stable at around $100 a barrel, but they are expensive and may not be sustainable in the long term.