Defying war fears, Gulf oil producers keep massive crude flows moving through Strait of Hormuz

Gulf oil producers are moving far more crude through the Strait of Hormuz than many expected possible, using US Navy-backed workarounds to keep one of the world’s most important energy corridors operating despite Iran’s pressure.

Oil and petroleum-product flows through the strategic waterway averaged 13.1 million barrels per day last week, according to marine-tracking firm Kpler. That is just below 80% of the 17.1 million barrels per day that crossed the strait before the war began.

“Given such a strong volume passing through the strait, it is clear Iran is losing its influence over it,” Matt Smith, Kpler’s director of commodity research, told CNN.

The rebound reflects a complicated effort by Gulf producers and the US.

Military-escorted tanker shuttles, discreet “dark” transits (AIS turned off) and rerouted export flows have helped restore a significant share of Middle Eastern oil shipments in recent months. 

Dark transits

Saudi Arabia has also shifted barrels back toward Hormuz after disruptions to the East-West Pipeline cut a major alternative route to the Red Sea.

But the renewed traffic masks a deeper problem: the present arrangement may be functioning, yet it is far from secure.

The US is committing substantial military resources to protect shipping, while global oil inventories continue to decline and fuel prices remain painfully high. 

The strategy has bought the market time, but it has not eliminated the underlying risk that a wider escalation, another infrastructure strike or intensified Iranian attacks could rapidly disrupt supply.

Shipments redirected

The oil market has repeatedly found ways to avoid the worst-case scenario since the conflict began. 

Producers have redirected shipments through pipelines, relied on military-assisted maritime movements, increased output outside the Gulf and benefited from weaker global oil demand.

Those measures have limited the immediate supply shock and helped prevent crude prices from reaching the extreme levels feared at the start of the conflict.

Yet they have also come at a cost. 

The market is increasingly relying on inventory drawdowns and emergency logistics rather than on a durable restoration of normal trade flows. Oil is a physical commodity: eventually, stored barrels run down, transportation bottlenecks tighten and the market must ration demand through higher prices.

For Asian markets, Canada is emerging the fast-growing new supplier. And While Russia is the much larger, entrenched discounted supplier, Middle Eastern producers remain Asia’s central source of crude because of scale, geography and refinery compatibility.

JPMorgan’s September 17 assessment was that global crude and refined-product inventories had fallen by about 555 million barrels since the Iran conflict began.

Oil inventory draws lower than JP Morgan's projection

JPMorgan had previously modeled a far larger possible draw of about 1.6 billion barrels, but said actual draws were only around one-third of that.

“Stockpiles may eventually be insufficient to offset lost or delayed supply,” the bank stated.

Still, JPMorgan said significant inventories remained in China, Europe, Japan and South Korea, so there was still a “buffer”. 

It warned, however, that prolonged Middle East disruptions would continue drawing stocks down toward a “stress threshold.” 

“Prices could rise sharply enough to force demand lower,” the bank warned, adding that if disruptions persist and inventory buffers weaken, prices could rise later in the year as the market becomes more reliant on demand destruction to rebalance supply and consumption.

Natasha Kaneva, JPMorgan’s head of global commodities strategy, told CNN that the uncertainty has become too great for a conventional base-case forecast.

“For the first time since the start of the Iran conflict, we don’t have a baseline view,” Kaneva wrote in a client note. “We simply don’t know how to model the endgame.”

Her central point is that the crucial issue is no longer only how long the war lasts. It is whether the global system can keep physically delivering enough oil to customers while disruptions persist.

Saudi Arabia’s backup route matters

Saudi Arabia’s East-West Pipeline has emerged as one of the region’s most important escape valves. The pipeline carries crude from the kingdom’s eastern oil-producing areas to Red Sea facilities, allowing exports to avoid the Strait of Hormuz altogether.

The route had carried roughly 6 million barrels per day during the conflict, just below its estimated 7 million bpd capacity. 

Its importance grew as it enabled Saudi Arabia both to export crude and to supply west-coast refineries that produce fuels including diesel.

That safety valve came under pressure after drone attacks prompted Saudi Arabia to shut the pipeline. 

The disruption, together with Houthi threats to Red Sea shipping, raised fears that two of the region’s major alternatives to Hormuz could be compromised at the same time.

Capital Economics estimates that up to 4% of global oil supply were taken offline by the shutdown of Saudi Aramco’s East-West pipeline, called “Petroline”.

While the pipeline attacks limited Saudi exports and briefly raised global oil prices, quick repairs restored the flow in a few days. 

A monthlong interruption could have kept as much as 120 million barrels of exports off the market, analysts stated.

Pipeline disruption, then restoration

Petroline has restarted and Yanbu tanker loadings have resumed, though the system is still operating well below both its pre-attack flow and its full design capacity. 

The latest reported throughput is approximately 2.0–2.65 million barrels per day, with Kpler expecting flows to rise toward 3–4 million bpd in the "near term".

Satellite imagery indicated activity at key Red Sea ports, signaling that pipeline operations may be ramping back up.

Why drivers and businesses still feel pain

For consumers, the market’s elasticity — the ability to absorb shocks — has offered only limited relief.

Oil has not yet hit $150: but it offers little consolation for households paying sharply higher prices at the pump or businesses facing higher delivery and freight costs.

Diesel remains problematic: It is affected not only by the Middle East conflict but also by disruptions to refining and fuel supply linked to the Russia-Ukraine war. 

The US average retail diesel price first exceeded $6 per gallon on September 11, reaching about 6.05–6.06 per gallon according to AAA; by late September, it had climbed to roughly $6.53 per gallon. 

In Europe, diesel stood at €2.159 per litre or reported September 14, jumped to €2.226 per litre on Week of September 21 ($9.68 per US gallon), and went up further to €2.23 per litre ($9.63 per US gallon), Euronews reported.

That matters beyond truck drivers: Diesel costs move through the broader economy because it powers freight trucks, farm equipment, construction machinery, rail transport and backup generators.

Higher diesel prices can therefore feed into food, shipping and consumer-goods costs.

Iran’s response could define the next phase

The durability of the Hormuz workaround depends heavily on Iran’s choices.

Iran has been unable to move its own oil through the strait because of the US naval blockade. 

As other Gulf producers recover exports, Tehran risks losing one of its most important sources of economic and geopolitical leverage.

That creates an incentive for Iran to make commercial transit riskier. Smith told CNN that attacks on tankers have become more frequent as Iran attempts to deter shipping and regain influence over the strait.

The result is an uneasy standoff: US-supported operations are preserving a meaningful flow of oil, but they require continued military protection, rely on vulnerable infrastructure and operate against a backdrop of shrinking inventories and elevated prices.

For now, the system is holding.

But it is holding because every available workaround is being used at once — and because Iran has not yet fully succeeded in shutting them down.