Covert Hormuz Crossings Are Holding Global Oil Prices in Check
Dark shuttle runs to the Gulf of Oman are moving more than four million barrels a day
Middle Eastern oil producers are pressing ahead with shuttling large volumes of crude out of the Persian Gulf, helping keep a lid on prices and easing fears of an energy-driven inflation spike, even as the Iran war continues.
The trade of ferrying oil through the Strait of Hormuz undetected and transferring the barrels onto tankers in the Gulf of Oman is running at full tilt despite recent attacks on vessels. The incognito crossings of the world's most vital energy chokepoint have become a major lifeline for markets that had braced for a far worse supply shock.
For producers in the region the situation is far from normal. Ships are subject to repeated hostility even where they carry some military protection.
The shuttling has been under way for months, but measuring how much oil those dark ships are moving is difficult for traders and analysts alike, because the vessels protect themselves by giving little indication of their positions. Volumes are running higher than market estimates of four million barrels a day.
Before the war about 20 million barrels a day crossed Hormuz, roughly a fifth of global oil supply. US Energy Secretary Chris Wright said last week that nine million barrels a day had crossed over the previous seven days, a figure that surprised many traders and sits at the high end of estimated flows, at almost half of pre-war rates.
Those embattled shipments are one reason Brent futures have spent much of August trading between $80 and $90 a barrel, well below the levels feared at the onset of the conflict, when some market participants were bracing for $150 oil. The dark shuttle transits have combined with pipeline workarounds, stockpile releases and demand reductions to limit the economic damage.
Abu Dhabi's state oil company has stated its determination to continue meeting its responsibility to deliver energy safely to global markets and to meet customer commitments as far as possible, despite the repeated targeting of its vessels.
The practical consequence for the market is that price stability now rests partly on tonnage that deliberately cannot be tracked, which leaves the published transit counts an incomplete measure of what is actually moving.
