Why Is Oil Traffic Through the Strait of Hormuz Increasing — and How Might Iran Respond?

Despite Iran’s continued restrictions on traffic through the Strait of Hormuz, oil flows through and around the waterway appear to be gradually increasing. This is one of the most important developments in the energy situation since the war began in February.

Before the conflict, around 20 million barrels of crude oil and petroleum products passed through the Strait each day. Kpler data put the February level at roughly 20.6 million barrels per day. After the war began on February 28 and Iran restricted traffic, flows fell sharply. In March, oil movements through the Gulf were reduced to around 6 million barrels per day. Since then, however, the flow has gradually recovered. By September, crude exports from major Middle Eastern producers had risen to more than -1416 million barrels per day, while flows through the Strait itself were also recovering.

This recovery does not mean that the Strait rate has returned to normal which is obviously didn’t. The situation is more complicated. Some oil is now moving through alternative routes, including pipelines, while a growing amount is being transferred between tankers outside the Strait. For Iran, this creates a new strategic challenge. The question is no longer whether Iran can restrict traffic through the Strait. It has already shown that it can. The question now is whether Iran will respond to the rising flow of oil and seek to reduce the volume moving through the Strait once again.

Pipelines Are Changing the Role of Hormuz

One of the main changes has been the greater use of oil pipelines that bypass the Strait.

Saudi Arabia has used its East-West pipeline to move crude toward the Red Sea, while the United Arab Emirates has an export route that allows some oil to reach the Gulf of Oman without passing through Hormuz. These routes cannot replace the Strait completely, but they can reduce the amount of oil that depends on it.

For Iran, this is an important consideration. Restrictions on Hormuz can still create major economic and political pressure, but the effect depends partly on how much oil can be moved through other routes.

The development also creates a broader strategic question. If alternative pipelines and export terminals become more widely used, the region may become less dependent on the Strait over time. At the same time, these alternatives require significant investment, additional infrastructure and higher transportation costs. In other words, the rise of alternative routes will not eliminate the importance of Hormuz. It changes the balance between the Strait and the routes that can partially replace it.

Shuttle Tankers Are Creating a New Oil Transport System

A second major development is the rapid growth of ship-to-ship transfers, particularly around the Gulf of Oman by UAE. Under this system, a shuttle can carry the oil out of the Strait area and transfer it to another super tanker, which then continues the longer journey to Asia or another market.

This system has expanded quickly. Reuters reported in September that ship-to-ship transfers in the Gulf of Oman had reached around 2.5 million barrels per day, up from about 1.4 million barrels per day in August. The increase was partly connected to the rise in Saudi exports through Hormuz and the disruption of alternative pipeline routes.

The shuttle system has two important effects.

First, it reduces the amount of oil that needs to be carried by a single tanker through the high-risk area. The shuttle tankers involved typically carry between about 200,000 to 1.5 million barrels, while before the war, much larger vessels, including supertankers carrying 2–3 million barrels, had to pass through the Strait to transport oil to international markets. This allows the risk associated with each movement to be spread across smaller cargoes and multiple vessels rather than concentrated in a single very large tanker.

Second, it changes the way risk and cost are distributed.

In first weeks after the war, shipping companies, tanker owners, insurers and oil buyers have to consider the risks of war, higher insurance premiums, freight costs and possible delays. But under the new system, governments namely UAE by its national oil company, ADNOC, play a greater role in organizing transportation and absorbing some of these additional costs in the Strait area. The reason is that the UAE see this as a better option: it can help keep the confrontation with Iran away from UAE territory and limit the risks to shuttle tankers, while also giving Abu Dhabi a card to use in its relations with Washington by showing its willingness to voluntarily bear the costs of keeping regional oil exports moving.

Iran’s Next Move

The final question is how Iran may respond if the current trend continues.

Iran is likely to have an interest in avoiding unnecessary escalation with its Gulf neighbors. Turning the dispute with the United States into a direct confrontation with Saudi Arabia, the UAE, Oman or other regional states would have additional political and security costs.

But at the same time, Iranian officials have made clear that they do not accept a situation in which Iran is prevented from exporting its oil while other regional producers continue to export freely. Iranian Parliament Speaker Mohammad Bagher Ghalibaf said on September 29 that if Iran cannot sell its oil, other countries in the region will not be able to sell theirs either. He also said that if Iran’s security is not guaranteed, regional infrastructure would not be safe.

This statement provides an important indication of how Tehran sees the issue. If Iranian oil exports remain blocked, Iran may seek to cut oil flow from the Strait at a high cost.

This does not necessarily mean that Iran would target loading terminals in Arab countries, although such a scenario cannot be ruled out in a major escalation.

For now, however, Iran may be more likely to shift the pressure away from the loading points toward ship-to-ship transfer zones. The reason is that targeting these STS transfer points could potentially recreate the same effect seen at the beginning of the war, when attacks on large tankers inside the Strait sharply reduced oil flows.

This could again raise the risks and costs for oil buyers and tanker operators, making the transportation of large volumes of crude more difficult. If these risks significantly disrupt the flow of oil, prices could rise and Iran could move closer to its objective of reducing regional oil exports without necessarily closing the Strait itself. At least on paper, such a scenario could shift the equation back in Iran’s favor and bring the region closer to the conditions of oil-flow restrictions seen at the beginning of the war. What happens in practice remains to be seen.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.