The return of Gulf exports to pre-war levels puts Iran's "Hormuz Leaf" to a new test, but the cost of insurance, military protection and alternative routes reveal that navigation is still far from normal
In recent weeks, the Strait of Hormuz has witnessed a remarkable shift in the movement of oil, after the Arab Gulf countries were able to restore a large part of their exports to levels approaching the pre-war stage, benefiting from the increase in the transit of tankers, the expansion of the use of alternative pipelines and routes, a new network of oil tankers, as well as US military support for navigation.
In contrast, Iranian oil exports across the strait have remained at near zero levels due to the continuation of the US naval blockade, after Tehran exported about 1.7 million barrels per day before the war.
And this shift puts one of the most important Iranian pressure cards in front of an unprecedented test, after Tehran has bet since the beginning of the war on its ability to disrupt shipping in Hormuz and raise the cost of energy trade, and thus use the Strait to enhance its negotiating capacity against the United States.
But the return of millions of barrels a day to the markets, despite continued tension and attacks, raises a larger question: Has Iran lost control of the Strait of Hormuz, or has Washington and the Gulf States only succeeded in building a costly system that allows partial circumvention of Iranian pressure?
16.5 million barrels per day
Data from the Kepler Ship Traffic Tracker reveals a significant change in the map of energy flows.
Between Sept. 1 and 28, crude oil and condensate exports from the region averaged at least 16.5 million barrels per day, a level roughly equivalent to the pre-war average if Iranian oil were excluded.
Of these, about 9.9 million barrels per day, or about 60%, passed through the Strait of Hormuz, while 23% of the coast of the Sea of Oman was loaded, mainly from Fujairah, and 17% exited through the Red Sea.
And the most important shift is that about 40% of the total oil exported from the region during September no longer needs to pass through Hormuz, after it was transported by land pipelines to the ports of the Red Sea and the Gulf of Oman.
Before the war, the share of oil avoiding the strait in this way did not exceed 17%.
And with that, not all Gulf exports are hostage to the same sea lane to the extent they once were, as Saudi pipelines to the Red Sea and the Emirati line to Fujairah have provided more room for maneuver.
But that does not mean that the importance of Hormuz has been radically reduced; Nearly 10 million barrels per day continued to pass through it during September, while the movement of tankers inside it also increased.
Iran out of oil recovery
Ironically, the recovery in the region's exports did not include Iran itself.
Kepler estimates that the transit of Iranian oil through Hormuz remained close to zero during September, after the blockade returned in July.
Prior to the war, Iran exported about 1.7 million barrels per day, so adding missing Iranian volumes to the account reduces the region’s overall export recovery to about 91% of its pre-war level.
This equation is distinctly different from the previous Iranian threat that stopping Iran's exports would make it very difficult for others to continue their exports.
Gulf states have been able to recover most of their crude oil exports, while Tehran's own exports have remained restricted.
Washington enters the shipping line.
But interpreting the shift in numbers alone does not provide the full picture. Along with alternative pipelines and routes, the U.S. military presence has played a key role in increasing ship traffic.
And Martin Kelly, senior intelligence analyst at EOS Risk Group, said U.S. support for ships is mainly air support, including issuing warnings, monitoring and intercepting incoming threats, whether drones, missiles or boats.
The ships are also using a U.S.-proposed southern route near the Omani coast to minimize risk.
But U.S. protection did not make the trip risk-free.
Ships using the Southern Route that do not have Iranian approval to use the Northern Route have remained vulnerable to attacks.
On 21 September, the UK Maritime Trade Operations Center (UKMTO) announced that a tanker heading into the Gulf had been hit by an unidentified projectile, before announcing on 23 September that a cargo ship had caught fire after being hit by a projectile.
This means that an increase in the number of transiting tankers does not mean the end of the Iranian threat or the return of full freedom of navigation.
What's left of "smart control"?
Iranian officials sometimes describe their policy in Hormuz as "smart control." Hamid Reza Azizi, senior Iran analyst at the International Crisis Group, argues that this strategy is not necessarily intended to prevent every ship from crossing, but rather to cause disruption to navigation, raise the level of risk, and influence energy prices.
In this sense, Iran does not need to effectively close the strait to achieve an economic impact. The mere possibility of an attack could prompt shipping companies, tanker owners, insurers and buyers to recalculate the cost of the trip and the associated risks.
And then high insurance premiums, increased transportation fares, the need for military protection, and the use of more complex routes become part of the Iranian pressure effect, even when tankers continue to move.
But Azizi said the combination of UAE economic initiatives and U.S. military and operational moves has created Iran's strategy to disrupt shipping.
Emirati "shuttle tankers"
And one of the most prominent new tools that has helped to restore the flow of oil is the emergence of a vast network of shuttle or shuttle oil tankers.
These tankers move between Gulf ports and cargo transport areas outside the strait, delivering oil to other tankers that take the long journey towards global markets.
According to Kepler data, at least 63 supertankers have entered the network, including 35 that operate regularly and make a round trip approximately every 16 days.
And in August alone, more than 70 percent of the crude oil that passed through Hormuz was transported from one ship to another near Fujairah.
This mechanism reveals how the UAE and other countries have managed to keep oil moving, but at the same time reveals the additional price.
"Carrying cargo from one tanker to another, providing more ships, insurance, and military protection all raise the cost of exporting a barrel."
Iraq to pay for continued exports
Iraq shows a clear example that the return of export volume does not necessarily mean the return of revenues to normal.
According to a document seen by Bloomberg and quoted by the article, the Iraqi oil marketing company "SOMO" provided significant discounts to buyers of October shipments who receive Iraqi oil in the Gulf.
And the discount on Basra crude averaged $34.5 per barrel compared to the benchmarks in the destination market, while the discount on Basra heavy crude reached $37.
And at the same time, Kepler data shows that Iraq’s exports rose in September to at least 2.6 million barrels per day.
And so Iraq succeeded in raising the quantities exported, but for a large commercial cost, which means that maintaining the number of barrels coming out does not necessarily equal maintaining the financial return per barrel.
Azizi believes that these arrangements may have trouble sustaining over the long term, whether it's the deductibles borne by exporting countries or the costs of covering the risks in the UAE case, as well as the cost of military support for the US.
Oil is back, but what about gas?
And here is one of the most important gaps in the talk about the return of Hormuz to normal. The high figures are mainly related to crude oil, not all cross-strait trade.
Kepler estimates show that the movement of LNG, LPG, petrochemicals and oil derivatives tankers remains significantly below pre-war levels.
And on the weekly average ending Sept. 28, the company recorded about 13.5 million barrels of crude oil per day exiting through Hormuz, a level approaching its pre-war baseline.
But other product-group sizes remained about 81% below the previous level.
This gap is particularly important for Qatar, which relies on the strait for gas exports, and the fertilizer and chemical trade and imports of Gulf countries do not show up in crude oil export figures.
So talk of a “return of Hormuz” based on the number of oil tankers alone presents an incomplete picture.
Imports are another problem
And it’s not just about exports. Gulf states need to receive ships loaded with goods, materials, and equipment, so their success in extracting oil does not necessarily mean that the movement of ships entering the Gulf has returned to normal.
According to the article, no mechanism has yet crystallized capable of completely solving this problem.
And so restoring crude exports is an important success for the new arrangements, but it does not mean restoring the Gulf’s entire maritime trading system.
Who has the upper hand?
Simon Henderson, a researcher at the Washington Institute who specializes in Gulf affairs, said the United States now possesses military superiority in the Gulf and has succeeded in confronting some of the Iranian threats and pumping large quantities of oil through the southern corridor near Oman.
According to his assessment, the balance of the current moment is tilted militarily in favor of the United States, but at the same time he warns that the duration of this situation is unknown.
And here is the point of separation between saying that Iran is facing a decline in its ability to impose its will, and saying that it has lost control of Hormuz completely.
The United States and countries in the region have succeeded in reducing the effectiveness of the Iranian threat to crude oil exports, but they have not eliminated the risks and have not returned overall trade to pre-war levels.
Why has the price of oil not fallen?
The other question is: If crude oil exports almost return to pre-war levels, why do prices remain high?
There are four main factors.
First, markets remain unconvinced that current flows are sustainable. During the ceasefire period in June and July, the approach of exports to similar levels led to Brent crude falling to about $70 a barrel, while the same did not happen this time, in an indication of the continued pricing of the possibility of renewed confrontation and supply disruptions.
Second, since the beginning of the war, more than 500 million barrels of global oil inventories have been consumed, coinciding with the return of high Chinese purchases, which has reduced the safety margin available to the market.
Third, exports of essential derivatives, including diesel and jet fuel, remain well below normal levels.
Fourth, the process of getting oil to the market has become more expensive and complicated, due to higher tanker fares, ship-to-ship transfers, alternative routes, protection expenses and security measures.
Has Iran Lost its Hormuz Leaf?
Current data do not provide a simple answer of “yes” or “no.”
On the one hand, Iran is facing a new reality: its oil exports through Hormuz are almost halted, while its Arab neighbors have been able to return most of its crude exports to markets.
The United States and the Gulf states, through military superiority, alternative corridors, pipelines, and shuttle tankers at additional cost, have also succeeded in reducing Tehran's ability to carry out its threat to prevent others from exporting if it is prevented from doing so.
But on the other hand, navigation has not returned to normal.
The attacks have not stopped, the costs of insurance, transportation and protection have increased, exports of gas, derivatives and petrochemicals are still severely affected, while the movement of imports continues to face a problem, and the continuity of the new system requires significant financial and military spending.
Therefore, it is more accurate to say that Iran's Hormuz paper has been visibly eroded, but it has not completely lost its impact.
The real test is no longer just Iran’s ability to stop or attack a tanker, but a different question: How long can the United States and the Gulf states afford the military, financial, and commercial cost of keeping the strait open despite the continued threat?
And how long can Iran afford to keep its oil exports tied up while its rivals and neighbors continue to gain market access?
Between these two questions, the struggle over Hormuz seems to have moved on from the battle of “who can close the strait?To the battle of who can afford to keep it open or troubled for longer?».
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