Iranian Attacks Threaten Fragile Oil Export Recovery Through Hormuz

Iran has intensified its attacks on tankers passing through the Strait of Hormuz, jeopardizing the fragile recovery of crude oil exports from the Persian Gulf. Over the past month, nearly 20 commercial ships, primarily tankers, have been targeted while navigating the strait, the Persian Gulf, or the coast of Oman, according to the Joint Maritime Information Center. The attack rate stands at roughly two ships for every 100 vessels that cross the strait, as reported by Michelle Wiese Bockmann, a senior maritime intelligence analyst at Windward.

Oil flows through Hormuz now rely heavily on a significant U.S. military presence to safeguard tankers along a southern route near Oman's coast. The sustainability of this rebound in crude exports remains uncertain without a negotiated resolution or Tehran's capitulation. Tankers often use a shuttle system, transferring oil to ships in the Gulf of Oman bound for Asia, which reduces attack exposure but requires more vessels, making the process financially unsustainable, according to Bob McNally, president of Rapidan Energy.

Crude oil shipments through Hormuz fluctuate daily, sometimes matching or exceeding prewar levels. However, shipments averaged about 10.3 million barrels per day for the week ended Saturday, 23% below the prewar baseline of 13.5 million bpd, according to Kpler data. Windward estimates current flows at 9-10 million bpd, compared to a prewar baseline of 14.5 million bpd. Despite the volatility, exports have increased as the U.S. military has secured a shipping route along Oman's coast.

Shipping costs have surged due to heightened maritime risks. Since July, at least nine sailors have died, 18 have been injured, and three are missing, according to the International Maritime Organization. The cost of shipping crude from the Persian Gulf to China has skyrocketed to $1 million per day for each tanker. Brent oil prices remain near $100 per barrel, reflecting the ongoing risks and high costs of delivering and insuring crude, as noted by Richard Meade, editor in chief of Lloyd's List.