Iran's Oil Leverage Fades as Middle East Shipments Rebound

Crude shipments from major Middle East producers such as Saudi Arabia, Iraq, and the UAE have rebounded to nearly 80% of prewar volumes since September, according to vessel-tracking data from Kpler. This is a significant increase from the low point after the war broke out. The data shows that crude exports from these countries have bounced back to nearly 13 million barrels a day, up from a low of around 7 million barrels per day in early September.

The recovery is attributed to improved defenses against Iranian attacks on tankers passing through the Strait of Hormuz. More tankers are now able to pass through the strait, and some major producers have even resumed shipments via the damaged east-west pipeline. However, shipment volumes still trail prior levels, and Saudi Arabia has started loading tankers in the Red Sea.

Iran's leverage over the Strait of Hormuz is weakening as a result. According to Kpler data, Iranian crude carried on tankers operating outside the blockade line fell from 29 million barrels in early September to 15 million barrels by the end of this month. Current stockpiles are expected to be depleted by early or mid-October.

U.S. Treasury Secretary Scott Bessent predicts that Iran will deliver its last oil to China within the next two weeks, after which there will be nothing left. This could lead to additional military action from Iran if it cannot secure alternative sources of revenue.