Crude oil flows through the Strait of Hormuz have returned to prewar levels as U.S. military escorts and rerouted pipelines restore shipments, according to Kpler data. But refined fuel shipments remain far below normal, deepening a global diesel shortage that has pushed U.S. prices to record highs.
Crude transiting Hormuz reached a seven-day average of 13.5 million barrels per day as of Monday, matching the prewar baseline for the strait, according to data published Wednesday by Kpler, which tracks tankers and global trade flows. Shipments from the wider Middle East region, including the Persian Gulf and Red Sea, reached a seven-day average of 19.5 million bpd, surpassing a prewar baseline of about 17 million bpd.
Iran has repeatedly declared the strait closed during the war, but Tehran is losing influence as strong volumes pass through Hormuz, said Matt Smith, director of commodity research at Kpler. The crude market has largely normalized even as refined product supplies remain constrained, said Natasha Kaneva, head of global commodities strategy at JPMorgan.
Fuel shipments lag the crude rebound
Refined products shipped through Hormuz stood at a seven-day average of 677,000 bpd as of Monday, compared to 3.6 million bpd before the war. Combined crude and product shipments reached 14.2 million bpd, about 80% of the Hormuz prewar baseline of roughly 17 million bpd.
The shortfall has pushed U.S. diesel prices to record highs, which poses a major threat to the health of the economy. According to Francisco Blanch, head of global commodities at Bank of America: "The biggest source of pain is the diesel market." President Donald Trump is weighing an export ban as he faces political pressure from Republican lawmakers ahead of the midterm elections.
Iran's own exports collapse
Iran's crude exports have cratered under a U.S. Navy blockade, Kpler data showed. Treasury Secretary Scott Bessent said Iran will make its final crude deliveries to China in about two weeks, leaving Tehran with nothing left to trade. Still, there is no hard evidence that the pressure will change Iran's position, Scott Modell, CEO of Rapidan Energy and a former CIA officer, said Monday.
Shuttle tankers and pipelines reroute flows
Security in the strait remains far from normal, and Iran continues to fire on tankers. As a result, more than 70% of the crude that crossed Hormuz in August switched tankers off the coast of the United Arab Emirates or Oman, a shuttle system protected by the U.S. military. It's a very expensive, huge U.S. military commitment, said Helima Croft, head of global commodity strategy at RBC Capital Markets.
Pipelines operated by Saudi Arabia and the United Arab Emirates are also picking up volume: about 40% of Gulf crude now bypasses Hormuz through these pipelines, up from 17% before the war. Yet pipelines face their own risks — Saudi Arabia shut its East-West pipeline earlier this month after a drone strike launched from Iraq damaged it, before loadings resumed at the Red Sea port of Yanbu.
Source: CNBC
Trading involves risk.
Risk Disclaimer
