Persian Gulf Oil Flows Top Prewar Levels

Oil exports from the Persian Gulf have climbed above levels recorded before the Iran war, even as tanker traffic faces elevated security risks and higher costs. Middle East oil flows, including shipments through the Strait of Hormuz and alternative regional routes, averaged more than 24 million barrels per day in the week through October 18, compared with 23.3 million barrels per day before the conflict. Regional exports averaged upward of 24 million barrels a day in that period, Kpler data show, confirming that overall volumes now exceed prewar benchmarks.

While total exports have increased, flows via the Strait of Hormuz remain below their previous levels. Oil flows through Hormuz, including offshore transfers in the Gulf of Oman, averaged about 14 million barrels per day in the latest week, equivalent to 82% of prewar levels. Approximately 14 million barrels per day still transit this critical chokepoint and nearby waters, underscoring its continuing importance to global supply despite intensified threats to shipping.

A greater share of Persian Gulf crude is now moving on routes that bypass the Strait of Hormuz. In September, around 40% of crude oil exported by Persian Gulf countries, excluding Iran, reached global markets via alternative routes, up from 17% before the war. These paths include pipelines that carry oil overland toward the Red Sea and the Gulf of Oman, as well as other regional channels that reduce reliance on Hormuz.

This shift toward alternative infrastructure has helped offset the reduction in volumes passing directly through the Strait. Increased use of pipelines in countries such as Saudi Arabia and the United Arab Emirates has supported the overall rise in exports. As a result, the region has maintained and even expanded output to international markets despite the partial disruption of its most exposed maritime corridor.

The continuation and growth of exports have come alongside a sharp increase in shipping expenses. The cost of transporting a barrel of crude oil from the Persian Gulf to China on a Very Large Crude Carrier has reached roughly $37.37 per barrel in freight costs.

War-risk insurance premiums have also escalated significantly. In some cases, premiums have risen to as much as 10% of a vessel’s value. Earlier in the conflict, comparable premiums had hovered closer to 3%, illustrating the degree to which insurers are pricing in heightened danger to ships operating in and near the Strait of Hormuz.

Exports have continued despite a marked increase in attacks on commercial vessels. About 30 attacks on vessels were reported in October, reflecting a challenging security environment for maritime traffic in the region.

In response, shippers and regional producers have adapted their operations and routing. An improvised shipping system operating under US protection, coupled with expanded use of alternative pipelines, has played a role in sustaining flows. Together, these measures have allowed Persian Gulf oil exports to not only withstand the disruption but surpass prewar volumes, even as risk levels and associated costs remain elevated.