Rising Oil Flows Through Hormuz Challenge Iran’s Strategic Position

The Strait of Hormuz, a critical choke point for global oil traffic, is seeing a rise in oil flows despite Iran’s restrictions. Before the war in February, the strait handled around 20.6 million barrels of crude oil and petroleum products daily. However, after Iran imposed restrictions in March, flows dropped to about 6 million barrels per day. By September, exports from major Middle Eastern producers had rebounded to over 14.16 million barrels per day, though the strait itself has not fully recovered.

One key change is the increased use of pipelines bypassing the strait. Saudi Arabia and the United Arab Emirates have utilized alternative routes to reduce their dependence on Hormuz, though these cannot fully replace it. Additionally, ship-to-ship transfers, particularly in the Gulf of Oman, have grown rapidly. These transfers allow smaller shuttle tankers to move oil out of the strait before transferring it to larger vessels, spreading the risk across multiple cargoes.

Iran now faces a strategic dilemma. While it has demonstrated its ability to restrict traffic through Hormuz, the rise of alternative routes and ship-to-ship transfers complicates its position. Iranian officials have hinted at potential actions to disrupt oil flows if their exports remain blocked. One possibility is targeting ship-to-ship transfer zones, which could raise risks and costs for oil buyers, potentially driving up prices and reducing regional oil exports.