Middle East Oil Exports Recover Despite Strait of Hormuz Attacks

Middle Eastern oil exports are rebounding despite ongoing tensions in the Strait of Hormuz. According to maritime intelligence firm Kpler, Gulf oil flows excluding Iran recovered to over 81% of pre-war levels in September, while exports from the wider Middle East exceeded pre-war levels on 14 days during the month. This recovery comes amid repeated attacks and threats against tankers, with at least one incident reported daily in the Strait of Hormuz or Gulf of Aden since October 2.

The increase in exports has been achieved through alternative shipping routes and complex logistics. Saudi Arabia has utilized its East-West pipeline system to bypass the Strait of Hormuz, while ship-to-ship transfers in areas like Sohar port in Oman have become more common. These workarounds, however, come at a cost. Freight rates, insurance premiums, and security expenses have risen, making it more challenging to move crude oil safely.

The Strait of Hormuz remains a critical energy corridor, with about one-fifth of the world's crude oil and liquefied natural gas passing through daily. Despite the security risks, the seven-day average of crude exports touched 18.3 million barrels per day by September 30, compared to the 12-month average of around 18 million barrels per day. The 14-day average for crude and condensate exports from the Middle East was 18.6 million barrels per day, according to Vortexa.

While the workaround has helped restore exports, the shipping system is under strain. The increased use of shuttle tankers and offshore transfers has placed additional pressure on tanker availability and increased costs. The CEO of Saudi Aramco, Amin Nasser, noted that it could take up to two years to replenish depleted global oil stocks if the situation around Hormuz improves. The fragility of the current system highlights the ongoing risks and challenges in the oil market.