TODAY: Is Hormuz reopening or are oil flows simply recovering?

Good morning, ladies and gents — today's theme: the strait as a variable everyone's solving for differently.

Washington says oil is moving through Hormuz again at a six-month high: Centcom’s Admiral Brad Cooper says GCC states have moved over 1 bn barrels through the strait in two months, with Iran exporting “zero.” The traffic data tells a different story — just 17 vessels crossed over the weekend, versus a pre-war daily average of 125.

Hormuz is now hitting QatarEnergy's own buildout: Equipment delays tied to the strait crisis could push back parts of the company's North Field expansion — a plan meant to nearly double Qatar's LNG capacity.

Meanwhile, Saudi Arabia and the UAE may outsource their Hormuz-bypass planning to India. State-run Engineers India is in early talks for consultancy work on roughly USD 1 bn of pipelines and terminals designed to route around the strait.

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Growth gets delayed

Hormuz is now hitting QatarEnergy’s buildout: The crisis around the strait could delay some of QatarEnergy's expansion projects because critical equipment is struggling to reach Qatar, Reuters reported, citing CEO Saad Al Kaabi. The warning reaches into a North Field expansion aiming to nearly double Qatar's roughly 77 mtpa capacity to 142 mtpa: North Field East's first train is due online in the first half of 2027, with the rest of its trains slated for later that year, while North Field South isn't scheduled to begin production until 2028.

Al Kaabi said QatarEnergy is currently producing only a “very minute” volume of LNG. Two of Ras Laffan’s 14 LNG trains have also been offline since Iranian strikes earlier this year, removing around 12.8 mtpa of capacity for an expected three-to-five years, while constrained Hormuz crossings have made moving the remaining output harder.

The squeeze is pushing QatarEnergy to build redundancy outside the Gulf. The company is already in talks with US suppliers including Venture Global, Cheniere, and Woodside Energy for around 2-3 mn tons of LNG annually through 2031 to help cover customer commitments, while rare Hormuz crossings and ship-to-ship transfers outside the strait have kept some Qatari volumes moving. If equipment bottlenecks begin slipping the North Field schedule too, Hormuz stops being only a problem for getting cargoes out — but also determining when Qatar can bring tomorrow's supply online.

KSA, UAE already seeking contractors for Hormuz workaround

The KSA and UAE could lean on India’s EIL for consultancy work for Hormuz workarounds: State-run Engineers India Ltd (EIL) is in early-stage talks with Saudi Arabia and the UAE for consultancy and engineering mandates as the two countries look to cut their reliance on the Strait of Hormuz. The Gulf producers are planning about USD 1 bn in pipelines, storage facilities, and export terminals to build out alternative routes for crude and petroleum products — and EIL wants a piece of the design and feasibility work that comes with it, The Hindu reports, citing chairman and managing director Atul Gupta.

Another workaround is on the mend: Saudi Arabia aims to restore about half the East-West pipeline’s capacity within days following recent drone strikes. While full repairs could take five to six weeks, the pipeline remains critical as the Kingdom’s primary export alternative to the high-risk Hormuz.

Market watch

Oil prices rose this morning as investors awaited US-Iran talks and monitored Hormuz supply flows, Reuters reports. Brent crude futures increased USD 1.14 to USD 101.48 / bbl by 03.17 GMT, while West Texas Intermediate (WTI) rose USD 0.87 to USD 96.65 / bbl.

The Baltic Index edges higher: The Baltic Exchange’s dry bulk index — which tracks rates for the capesize, panamax, and supramax vessel segments — was up 0.8% to 3,399 points on Monday. The capesize index increased 1.2% to 5,839 points, while the panamax inched up 0.2% to 2,255 points. The smaller supramax gained 0.4% to 1,771 points.

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