There is life in the Strait of Hormuz

Given the high volume of traffic passing through the Strait of Hormuz, Iran is losing its influence in the region, according to Kpler, the company that monitors maritime traffic, after sharing data from the past week, in which the flow of oil and petroleum products through the Strait is reported to have reached its highest level since last February, averaging 13.1 million barrels a day – ‘just under 80 per cent of the 17.1 million barrels that passed through daily before the outbreak of the war’. Data from various monitoring companies vary due to the difficulty in tracking oil tankers with their transponders switched off, but an increasing number of industry experts say that volumes over the past month, whilst not yet back to pre-war levels, have risen. This is because, for months, the US military has been escorting oil tankers along the southern corridor running alongside Oman, in what had been described as a “secret operation” – even then, there were rumours that Tehran had lost control of this stretch – and which, since it was revealed, is said to have encouraged the resumption of trade from Saudi Arabia, Iraq and the United Arab Emirates. The Saudi reopening of the East-West oil pipeline, attacked last month by the Houthis, has also helped to stabilise the global oil market. Yet, despite these positive signs, fuel prices remain high and could rise further. 

Yesterday’s news of signs of recovery in the Strait of Hormuz also boosted confidence in the markets, which saw a slight fall in oil prices; however, an analyst from the financial platform Kcm Trade explained to Reuters that prices are very likely to remain high for some time to come, because much of the increase in volumes “is still based on alternative solutions such as ship-to-ship transfers”, methods that are less efficient and, above all, more expensive – which Gulf officials have already made clear are temporary and unsustainable in the long term. Another investor told the New York Times that the market remains tight and that, despite the resumption of oil exports from the Gulf, global supply is still below world demand: production needs time to ramp up and refineries have not yet returned to full capacity. The Iranian regime, on the other hand, is reportedly still unable to ship its crude oil since the United States reimposed the port blockade in July; for this reason, Iran’s proposal to reopen the Strait of Hormuz within seven days – put forward last week – includes the lifting of sanctions and the lifting of the US naval blockade.

According to Kpler, the oil reserves accumulated by Iran outside the blockade zone could run out by mid-October, which would place Iran in a position of weakness in negotiations, depriving it of its strongest leverage in talks with the United States and the ability to secure concessions by holding global energy supplies to ransom; however, it would also provide an incentive to step up attacks on oil tankers, ports and the energy infrastructure of the Gulf states, using the only means left to them to increase the pressure. Yesterday, the UK Maritime Trade Operations agency stated that a fire broke out overnight – and was subsequently extinguished – on board an oil tanker that had been struck by ‘an unidentified projectile’ whilst passing through the Strait of Hormuz.