The war in the Middle East has cut daily oil flows through the Strait of Hormuz from close to 20 million barrels to an estimated 6 to 8 million, pushing exporters and importers to rebuild trade routes around the chokepoint. The shift has already added billions to global energy bills, and Brent and WTI crude both trade above $90 a barrel as the disruption persists.
Hormuz flows collapse, exporters reroute
Before U.S. and Israeli strikes on Iran began, the Strait of Hormuz carried close to 20 million barrels of crude a day out of the Gulf states. That volume has now fallen to an estimated 6 to 8 million barrels daily. Liquefied gas exports have suffered even more, with Qatar struggling to ship gas under a force majeure after strikes damaged its Ras Laffan hub.
Saudi Arabia reversed the flow on its East-West pipeline to send oil to the port of Yanbu instead of through Hormuz, but Yanbu cannot handle the volumes the Persian Gulf ports once did. The UAE redirected crude to Fujairah, outside the strait, and ADNOC now plans to double the capacity of the pipeline feeding that port, though the expansion will not be finished until next year.
Importers pay more for longer routes
Diversification runs both ways. Research group CREA found the global energy import bill rose $330 billion between March and August above what had been expected, as the conflict pushed up oil and gas prices. Both benchmarks now trade above that mark: Brent and WTI both trade above $90 a barrel, and prices may not retreat as easily as they did three months ago.
Japan illustrates the cost. The country relied on the Middle East for almost all its crude before the war, then rushed to secure the United States, Canada, African producers, and Azerbaijan as alternatives. That scramble produced a record $76.39 billion import bill for July, a figure likely to be topped in August. European importers face similar pressure under EU sanctions on Russian oil and gas, while China and India have instead increased their Russian crude purchases to offset lost Middle Eastern supply.
A pricier, less concentrated market
The rerouting could leave the oil market permanently changed. Every exporter with an alternative route is already using it or building one, which over time would reduce the Strait of Hormuz's dominance — though the alternative infrastructure takes time to build. That leaves a market less dependent on a handful of chokepoints, but one that carries oil at a higher structural cost.
Source: Oilprice.com
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