Oil is "flowing again" through Hormuz — just not many ships are

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WHAT WE’RE TRACKING TODAY

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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Washington says Hormuz is recovering — but shipping numbers say no yet

Washington says oil is moving through Hormuz again. Crude, cargo, and LNG through the strait hit a six-month high over the past two weeks, US Centcom Commander Admiral Brad Cooper said (watch, runtime: 1:53) with GCC countries moving more than 1 bn barrels over the past two months. He credited US naval escorts and mine clearance, and said Iran “has exported zero barrels” under a US blockade — a claim Tehran disputes, maintaining the strait is closed. Washington is working with GCC states, shippers, and insurers to push volumes higher, Cooper added.

But even a partial reopening leaves the world heavily dependent on the strait. US Energy Secretary Chris Wright said last week that global markets will still need roughly 10 mn bbl / d of crude and petroleum products moving through the strait, even as Washington tries to rebuild traffic, Bloomberg reports.

Saudi Arabia is feeling that dependence more directly: The Kingdom is currently rerouting its oil exports back through the Gulf to cover the gap left by the strike on the East-West pipeline. Aramco has sold roughly 60 mn barrels from Ras Tanura for ship-to-ship transfer off Sohar, Oman, this month and the next, lifting the company’s Gulf exports back to 1-1.5 mn bbl / d, in line with or slightly above August levels.

Losing the bypass changes the resilience equation. “If Hormuz and its main bypasses are constrained together, the system loses the ability to shift cargo away from trouble. Two routes offer limited protection when the same conflict can disrupt both. The binding constraint becomes how much oil can leave, rather than how much is available to load,” Wolfgang Lehmacher, former head of supply chain and transport industries at the World Economic Forum, tells EnterpriseAM.

Yet vessel traffic tells a more disrupted story: Visible commercial traffic through Hormuz remains only a fraction of pre-war levels, with just 17 commodity vessels crossing the strait over the weekend, down from 37 the previous weekend, Reuters reports. Before the war, Hormuz handled roughly 125 large commercial vessels every day — meaning an entire weekend of current traffic still amounts to only a fraction of what the strait used to handle in a single day. Some vessels are also crossing with AIS switched off, so visible traffic understates the true count, but the gap remains huge.

At the cargo level, the picture is less straightforward: Pakistan negotiated with Iran to secure passage for another tanker carrying Qatari LNG over the weekend, Bloomberg reports. The cargo had been sitting aboard the vessel since loading at Ras Laffan in late June and would mark the second Qatari shipment to reach Pakistan through a negotiated passage this month. The bilateral workaround shows that rising aggregate flows don’t necessarily mean Hormuz has normalized — but some cargoes are still relying on individually arranged access, while over vessel traffic remains far below pre-war levels.

The real test of normalization is what happens after the cargo clears. Clearing stranded barrels or getting individual ships through says less about recovery than whether operators return, reload, and complete repeated voyages on predictable schedules, Lehmacher says. More barrels may show that cargo is moving again, but physical normalization means operators can plan the next voyage with confidence over access, timing, and cost, he adds.

What’s next? Ins’rers need to be comfortable underwriting the trip, ports need to function reliably, and rescue and salvage capacity needs to be available without every cargo depending on a specially negotiated passage, Lehmacher notes.

Iraq starts trucking crude from Basra to Kirkuk to keep its northern oil-export route supplied

Iraq began trucking crude oil from its southern oilfields to keep its northern export routes supplied. State-owned Basra Oil Company (BOC) is launching a pilot program targeting 100k-150k bbl / d in shipments from its Zubair 1 site to a storage facility in Kirkuk, under a contract with local KAR Group covering c. 5 mn barrels, according to a statement. BOC plans to add loading operations at Zubair 2 and Al Tuba to scale up the route.

But volumes remain well below target: The initial two-day pilot moved c. 38k barrels aboard 209 tanker trucks, Reuters reports — a rate of some 19k bbl / d, or barely a fifth of the lower end of BOC’s target. Limited truck availability and constrained loading infrastructure at southern oilfields mean a significant expansion would be needed to materially increase northern exports, BOC sources told the newswire.

The northern export route is already running below pre-war levels. Flows to Turkey’s Ceyhan port stand at around 200k bbl / d, down from some 250k bbl / d before the conflict, per oil ministry figures cited by the newswire. Iraq and Turkey signed a one-year transit agreement in August to keep crude flowing through the Kirkuk-Ceyhan pipeline, covering up to 750k bbl / d while both sides negotiate a longer-term framework.

REMEMBER- Trucks are already part of Iraq’s export workaround. More than 600k tons of Iraqi fuel oil reached Syria by road in June for export through Baniyas — which handles an average of 900 tanker trucks per day — helping relieve storage pressure at refineries. The longer-term fix, pipeline routes linking Basra to Baniyas and Fishkhabur via Haditha, remains under discussion, BOC said.

Why it matters: Iraq’s main route to market runs south through the Hormuz. Trucking crude to Kirkuk and on to Turkey’s Ceyhan port gives Baghdad an alternative route to keep oil flows moving without depending on the chokepoint. However, replicating the scale and economics of its main maritime outlet requires substantial investment — and the workarounds bring bottlenecks of their own. The payoff is keeping some barrels moving and revenue coming in, even if that means moving less at a greater cost.

Asyad advances fleet renewal plans with three tanker sales

Asyad’s fleet reset moves from LNG into oil tankers: Oman's Asyad Shipping is selling two VLCCs, Seeb and Samail, for USD 160.2 mn, according to a disclosure (pdf), alongside the USD 17.5 mn sale of its 18-year-old MR product tanker Al Amerat, according to a separate disclosure (pdf).

The two 2011-built VLCCs aren't leaving the fleet yet. Asyad will keep operating them — one through October or November, the other through mid-January 2027 — letting the company keep earning from the strong freight market before handover, while Al Amerat is expected to leave the fleet by end-September. The VLCC sales are expected to generate a USD 75.2 mn positive income impact; Al Amerat adds another USD 1.3 mn.

This is the same fleet reset we’ve been watching: The company spent the first half of the year shedding older gas tonnage, including four partially owned LNG carriers and the 2001-built Sohar. The latest disposals come as four newbuild VLCCs are due to join the fleet by year-end, while the products side is also being refreshed — with six new 50k-dwt MR tankers ordered from Hyundai Heavy Industries in July for delivery from 2029, on top of two product tankers already on order.

A Hormuz workaround is draining the global tanker fleet — and Europe and Asia are paying for it

A Hormuz workaround is draining the world’s supertanker fleet — and refiners everywhere are paying for it. Shipping a VLCC of US crude from Houtston to Asia now costs roughly USD 52 mn, or about USD 26 / bbl — equivalent to close a quarter of the value of WTI futures, Bloomberg reported. Freight used to be almost incidental to the economics of the barrel, but now it can determine whether the trade happens at all.

Hormuz turned one voyage into two

The workaround keeping Gulf crude moving through Hormuz is also helping drain the tanker pool. Instead of one VLCC inside the Gulf and sailing all the way to Asia, producers increasingly use a dedicated shuttle tanker to carry crude through Hormuz before transferring it ship-to-ship in safer waters off Oman to a second vessel for the long-haul leg.

That means two sets of freight economics for every barrel, not one. Owners are increasingly pricing the risky Hormuz crossing separately from the onward Gulf of Oman-Asia voyage, rather than treating the movement as a conventional round trip. The system reduces how long individual vessels need to spend inside the highest-risk waters, but requires more ships, additional positioning, and another cargo handoff to move the same barrel to its final buyer.

The scale of that workaround has jumped in a month. Around 2.5 mn bbl / d of crude is expected to load through STS transfers in the Gulf of Oman this month, up from 1.4 mn bbl / d in August and equivalent to roughly 40% of the crude currently moving through Hormuz. Overall exports through the strait have recovered to around 6.5 mn bbl / d so far in September, Reuters reports.

Saudi Arabia is leaning on that same system, even harder. Aramco had sold roughly 60 mn barrels from Ras Tanura for September and October loading through STS transfers at Sohar — equivalent to around 1-1.5 mn bbl / d — as it compensates for lower Red Sea exports following the East-West Pipeline shutdown. Early-October supertanker bookings reached around Worldscale 800, a sign of how much extra demand is landing on an already stretched fleet.

The squeeze is rewriting who buys what

Fewer available ships mean refiners are already breaking their usual rules to secure capacity. VLCCs on the benchmark Gulf-to-China route are earning upwards of USD 1.2 mn a day, while brokers say there are periods and locations where virtually no supertankers remain available for charter. Asian buyers are putting some US crude onto roughly 700k-barrel Aframaxes instead of waiting for VLCCs, while Atlantic cargoes are being split between two 1 mn-barrel Suezmaxes rather than loaded onto a single 2 mn-barrel supertanker — keeping the crude moving, but using more vessels to shift the same volume.

US-to-Asia crude flows have thinned out as freight roughly tripled. Japan’s refiners began looking closer to home — as one recently snapped up prompt Alaskan crude despite the grade not being an obvious fit for Japanese plants — while Angolan barrels that would normally travel thousands of miles to China are struggling to find buyers.

Europe is seeing the opposite problem: proximity is suddenly worth a fortune. Brent futures peaked around USD 110 / bbl last week, but physical Dated Brent moved above USD 130 / bbl as refiners chased barrels they could secure without paying for another intercontinental voyage. The scramble sharpened further after Saudi Arabia allocated no October term cargoes to European buyers, leaving refiners to compete for whatever nearby alternatives remain.

Calendar

16-17 September (Wednesday-Thursday): Saudi Maritime & Logistics Congress, Dammam, Saudi Arabia.

22-23 September (Tuesday-Wednesday): Breakbulk Americas, Houston, US.

22-24 September (Tuesday-Thursday): Seamless Middle East, Dubai, UAE.

28-30 September (Monday-Wednesday): Transport Logistics Middle East, Riyadh, Saudi Arabia.

OCTOBER

12-14 October (Monday-Wednesday): The Airport Show, Dubai, UAE.

20-22 October (Tuesday-Thursday): TOC Americas, Cartagena, Colombia.

21-22 October (Wednesday-Thursday): Global Ports Forum, Singapore.

26-29 (Monday-Thursday): Air Cargo Forum, Miami, US.

27-29 October (Tuesday-Thursday): Routes World, Riyadh, Saudi Arabia.

NOVEMBER

2-5 November (Monday-Thursday): ADIPEC Maritime and Logistics Exhibition and Conference, Abu Dhabi, UAE.

10-11 November (Tuesday-Wednesday): TOC Asia, Singapore.

10-12 November (Tuesday-Thursday): Intermodal Europe, Rotterdam, Netherlands.

11-13 November (Wednesday-Friday): Logitrans, Istanbul, Turkey.

18-19 November (Wednesday-Thursday): Breakbulk Asia, Singapore.

FEBRUARY 2027

10-12 February (Wednesday-Friday): Routes Americas, San Juan, Puerto Rico.

MARCH 2027

16-18 March (Tuesday-Thursday): CMA Shipping, Houston, US.

16-18 March (Tuesday-Thursday): Routes Asia, New Delhi, India.

APRIL 2027

20-22 April (Tuesday-Thursday): Routes Europe, Antalya, Turkey.

26-29 April (Monday-Thursday): Transport Logistic and air cargo Europe, Munich, Germany.

26-29 April (Monday-Thursday): Saudi Smart Logistics, Riyadh, Saudi Arabia.

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