Hormuz paradox: Why flowing oil could prolong Iran war

Dubai: Iran says it controls the Strait of Hormuz. Donald Trump insists the United States has broken Tehran’s grip on the vital waterway.

The reality is more complicated — and could help explain why a conflict now deep into its sixth month remains so difficult to end.

Shipping traffic remains severely restricted, demonstrating Iran’s ability to deter shipowners through the threat of attack. At the same time, growing volumes of oil are reaching international markets through US-protected passages, pipelines, ship-to-ship transfers and vessels attempting to conceal their movements.

The result is an unusual stalemate: Iran can disrupt Hormuz but cannot completely stop Gulf oil from getting out. The US can keep some oil moving but cannot restore normal shipping.

Traffic far below normal

Since July 7, only about two to three Very Large Crude Carriers (VLCCs) have passed through the strait each day on average, according to Kpler, which tracks vessels using transponder and satellite data.

Before the war, around eight VLCCs made the journey daily.

Even allowing for so-called “dark” transits by ships attempting to avoid detection, traffic remains dramatically below normal.

That matters because Iran does not have to physically close Hormuz. The threat that a tanker could be attacked is itself enough to deter many operators.

Hormuz: The numbers

• 2-3 VLCCs a day have crossed Hormuz on average since July 7, down from about 8 a day before the war.

• 15 million barrels a day are leaving the Gulf through Hormuz and pipelines, according to the US energy secretary.

• 20 million barrels a day were exported from the region before the war.

• 72 of 84 tankers — about 86% — crossing since July 7 likely used the UN-authorised route through Omani waters, Kpler estimates.

• Brent crude near $94 a barrel after jumping 2.4% on Thursday.

• WTI around $86, up 2.5%, as Trump's threat of economic warfare rattled markets.

• Into 2027? Analysts warn continued oil flows could reduce pressure for a settlement and prolong the war.

“Iran exerts near-full control of the Strait of Hormuz” through “the threat of attack”, Dimitris Maniatis, chief executive of Greece-based maritime security company Marisks, told CNN.

Maniatis believes Tehran may be deliberately turning a blind eye to some ships, including vessels ultimately connected to Iranian, Russian, Chinese or Turkish interests.

Switching off a ship’s Automatic Identification System, or AIS, makes movements harder for commercial tracking services to follow but does not make a tanker invisible.

“A vessel that turns off its AIS does not go invisible,” Maniatis said.

“If Iranians want to hit a vessel, they don’t rely on its AIS,” he added.

Some vessels are also using ship-to-ship transfers outside Hormuz to obscure the movement of crude.

US says its grip is growing

Washington tells a different story.

US Energy Secretary Chris Wright has said as much as 15 million barrels of oil are leaving the Gulf each day on average, including shipments through Hormuz and pipelines. Before the war, the region exported about 20 million barrels a day.

Ship-tracking companies estimate considerably lower volumes, although analysts acknowledge that dark transits make the true figure difficult to establish.

Wright conceded that Iran is still “causing difficulties” for the region and global economy but argues that Tehran’s ability to do so is declining.

“Our ability to escort and bring products out of that region is growing,” he said.

Kpler data offers some support for that claim. Of 84 crude-laden tankers that crossed Hormuz since July 7, it estimates that 72 — or 86% — probably used a UN-authorised route through Omani waters, although Kpler cautions that it cannot establish this with certainty.

Markets remain on edge

Even partial disruption is enough to keep oil markets nervous.

Oil prices jumped more than 2% on Thursday after Trump threatened “economic warfare” against Iran.

Brent crude climbed 2.4% to almost $94 a barrel, its highest level since late July, while US benchmark West Texas Intermediate rose 2.5% to around $86.

The reaction illustrates why Hormuz remains one of Tehran’s most powerful sources of leverage. Before the war, roughly a fifth of the world’s oil supply passed through the strait.

Could flowing oil prolong the war?

There is another, counterintuitive consequence: oil continuing to get out may actually reduce the urgency for either side to compromise.

Enough crude is reaching global markets to prevent a more severe energy shock. At the same time, Iran continues to generate revenue and retains the ability to threaten shipping.

That creates breathing room for both Tehran and Washington.

“Barrels getting through (Hormuz) raise the odds of a longer war, possibly deep into 2027,” Dan Alamariu, chief geopolitical strategist at Alpine Macro, said.

“Neither side feels urgency if oil does not materially move and Iran still earns enough to sustain the regime.”

That may be the real significance of the struggle over Hormuz.

Iran does not have to completely close the strait to wield enormous economic leverage. Washington does not have to completely reopen it to prevent an intolerable global oil shock.

For now, both sides may have just enough control to keep going — but neither has enough to end the standoff.