Iran’s Renewed Attacks Threaten Gulf Oil Export Recovery
Crude oil exports from Gulf producers have rebounded to near prewar levels, but Iran’s renewed attacks on vessels in the Strait of Hormuz threaten to disrupt this recovery. According to data from ship-tracking firm Kpler, exports from Middle Eastern nations excluding Iran averaged at least 16.5 million barrels per day in September, roughly 87% of the nearly 19 million barrels shipped before the war began in February. Saudi Arabia, the region’s top oil producer, saw its exports surge to 6.9 million barrels per day in September, up from 2.45 million in August.
The recovery in shipments has been supported by U.S. Navy escort operations, preemptive strikes against Iranian facilities, and shuttle operations introduced by producers like the United Arab Emirates. However, these measures come at a high cost, with Gulf producers paying $30 million to $40 million per shuttle run through the strait, or $15 to $20 per barrel, excluding insurance premiums. Rory Johnston, founder of oil research firm Commodity Context, noted that the current pace of shipments is impressive but unsustainable due to these elevated costs.
Despite the recovery, attacks on ships in the Strait of Hormuz have escalated. The United Kingdom Maritime Trade Operations reported seven attacks near the strait’s narrowest section since late September, with another vessel attacked recently. Iran’s Islamic Revolutionary Guard Corps warned that ships transiting the strait with U.S. support could face fire. Analysts suggest the renewed attacks may already be reducing shipments, with preliminary data indicating a drop of 2 million to 3 million barrels per day.
Analysts warn that the fragility of the oil market is further exposed by these disruptions. Brent crude prices remain near $100 per barrel, reflecting concerns over potential shipment declines and sustained high costs. Hamad Hussain, senior economist at Capital Economics, expects Brent to hold around $100 through the end of the year, with Brent closing at $102.25 on October 2nd, up about 5% for the week.