Recent shipping data cited by Reuters shows Gulf oil flows excluding Iran recovered to roughly 81% of pre-war levels in September. Reuters reported on Oct. 6 that oil prices ended little changed after recovering earlier losses, as stronger Middle East exports and a planned Group of Seven stockpile release were balanced by continuing supply risks in the region.
Gulf producers have kept more oil moving through alternative routes, pipeline diversions and supervised transit corridors. Associated Press reporting in late September said Saudi Arabia, the United Arab Emirates and other Gulf producers found multiple workarounds after the Strait of Hormuz disruption, including the use of spare pipeline capacity and shuttle movements near Oman.
Those workarounds helped prevent the worst-case supply shock. They also made the system more expensive to operate. AP, citing maritime data company Windward, reported that spot charter rates for Hormuz transits reached $1 million per day on Sept. 11. AP said that was equivalent to roughly $26 per barrel and made shipping about a quarter of the cost, compared with a usual range of 1% to 3%.
The bottleneck moved from production to movement
A separate Reuters energy column, citing Kpler data, said crude flows through the Strait of Hormuz reached 14.2 million barrels per day on a seven-day average on Sept. 26, nearly 80% of pre-war levels. Yet the same report, citing Poten & Partners, said rates to move crude from the Middle East to Asia aboard a very large crude carrier recently exceeded $1.2 million per day, compared with roughly $30,000 per day in January.
When a VLCC day rate reaches seven figures, the freight market is saying that available ships, safe routes and willing crews have become scarce resources.
Tankers that would normally complete a direct voyage can spend longer waiting, rerouting or participating in ship-to-ship transfer systems. Some owners demand higher compensation for war-risk exposure. Higher insurance costs add to the pressure. Buyers sourcing crude from farther away also tie up vessels for longer, reducing available tanker supply in other regions.
A further recovery in exports can even add short-term strain if the recovered barrels still need to move through the same complicated shuttle systems. More crude on the water is positive for supply, but it can also mean more demand for already expensive ships.
Refining is a second constraint
Shipping is not the only pressure point. Refining capacity is also limiting how quickly crude recovery can turn into cheaper fuels.
The International Energy Agency’s August Oil Market Report said global refinery crude throughputs in July remained nearly 5 million barrels per day below year-earlier levels. The IEA also said tight product markets pushed Atlantic Basin refining margins to record highs as diesel, jet fuel and gasoline cracks rose amid supply shortfalls and depleted stocks.
The G7 response shows how serious that product-side pressure has become. In an Oct. 2 statement, G7 leaders said they would coordinate a release through the IEA of 100 million barrels over four months, including a frontloaded diesel release within the first 20 days. The statement also said members would coordinate refinery maintenance schedules and temporarily raise utilization where feasible.
Stock releases can ease immediate supply pressure. They do not create permanent tanker capacity or rebuild lost refining capacity.
How the pressure reaches businesses
Logistics-heavy businesses can face fuel surcharges and higher airline and trucking costs. Manufacturers can see pressure through resins, chemicals and packaging. Retailers can face higher inbound freight costs. Service businesses can still feel the effect when suppliers reset prices to cover transport and energy uncertainty.
The crude market can improve before the delivery system has healed.
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