Iran has ramped up its assaults on tankers passing through the Strait of Hormuz, threatening the fragile recovery of crude oil exports from the Persian Gulf. In just the past month, nearly 20 commercial vessels, mainly tankers, have been targeted while navigating Hormuz, the Persian Gulf, or waters near Oman. This information comes from a coalition of U. S.-allied military forces keeping an eye on maritime security in the region.
The frequency of these assaults is causing alarm. Iran reportedly targeted around two ships for every 100 traversing the strait in the third quarter, a senior maritime intelligence analyst at Windward. This uptick in attacks has led to a heavy reliance on the U. S. military to protect tankers along a southern route near Oman. But without a diplomatic solution or a strategic shift by Tehran, the sustainability of the rebound in crude exports remains in question.
To avoid Iranian attacks, tankers are increasingly using a shuttle system. This involves moving crude through Hormuz and then transferring it to other ships in the Gulf of Oman for delivery to Asia. While this strategy reduces direct exposure to threats, it requires more vessels, which increases costs. Bob McNally, president of Rapidan Energy, noted the financial burden of this approach, calling it inefficient for moving commodities like oil out of Hormuz.
Crude oil shipments through the strait have been volatile, sometimes reaching or even surpassing pre-war levels. Data from Kpler shows shipments averaged 10.3 million barrels per day (bpd) for the week ending Saturday. This is about 23% below the prewar baseline of 13.5 million bpd. Windward's estimates suggest an average of 9-10 million bpd compared to a prewar baseline of 14.5 million bpd.
Despite these hurdles, crude flows have improved compared to earlier in the conflict, thanks to U. S. military efforts to secure a shipping route along Oman's coast. Yet, the cost of transporting crude remains high, affecting both the lives of crew members and the financial aspects of freight and insurance rates. Since July, at least nine sailors have died, 18 have been injured, and three are missing, according to a United Nations agency.
As security conditions deteriorate, the cost of shipping crude from the Persian Gulf to China has skyrocketed to $1 million per day for each tanker. Richard Meade, editor in chief of Lloyd's List, noted that while oil flows have recovered, the threat to tankers is still very present. Brent oil prices continue to hover near $100 per barrel, illustrating the ongoing challenges in the market.
McNally from Rapidan Energy highlighted that high prices persist due to the costly nature of delivering, insuring, and landing crude in regions where benchmark prices are set. Even though more oil is being exported, the freedom of navigation in Hormuz is still compromised, with Tehran exerting control over the strait.
In a recent incident, Iran's Revolutionary Guard intercepted a tanker in the strait, ordering it to turn around or face attack. The vessel complied with the demand. Meade emphasized that the oil market isn't becoming more secure. Instead, it's becoming more adept at functioning under constant insecurity.
