Crude oil exports from the Persian Gulf, excluding Iran, have surged back to approximately 80% of their pre-war levels, reaching over 14 million barrels per day (mbd) by September. This significant recovery follows a sharp decline to around 4.5 mbd in March after initial disruptions. However, this rebound highlights a growing disparity, as Iranian oil shipments have effectively collapsed under an ongoing US naval blockade.
Gulf Nations Restore Export Capacity
The swift recovery for Gulf producers like Saudi Arabia and the UAE has been facilitated by several strategic measures. The US military has played a crucial role in securing parts of the Strait of Hormuz and establishing a two-way shipping corridor along the coast of Oman, enabling oil convoys to resume operations.
Beyond military protection, Gulf countries have diversified their export routes. Approximately 40% of crude now leaves the region without traversing the Strait of Hormuz, a substantial increase from just 17% before the conflict. This shift is largely due to increased reliance on pipelines, such as Saudi Arabia’s East-West pipeline and the UAE’s extensive network, which move crude directly to alternative export terminals.
Furthermore, tanker movements have adapted. Over 70% of crude that crossed Hormuz in August reportedly underwent offshore transfers, mainly near the UAE or Oman. Under this system, shuttle tankers transport crude through the Strait to the Gulf of Oman, where the cargo is then transferred to other vessels for onward delivery, particularly to vital Asian markets. This complex system is heavily supported by the US military's presence in the corridor.
Iran's Oil Lifeline Severed
In stark contrast to its neighbors, Iran faces a dire economic situation. Tanker-tracking data indicates a complete collapse of fresh Iranian crude exports due to the persistent US naval blockade. This development is a severe blow to Tehran, as oil exports remain a critical source of national revenue. While other Arab producers have restored and even exceeded pre-war export volumes, Iran struggles to maintain any access to international markets, leading to significant economic constraints.
Refined Fuels Face Lingering Pressure
Despite the recovery in crude exports, the market for refined fuels, including gasoline, diesel, and jet fuel, remains under pressure. Shipments of these products are estimated to be only around 50% of pre-war levels. The transport of refined products is generally more complex and costly than crude oil, and several Gulf refineries damaged early in the conflict have yet to fully restore operations.
This imbalance contributes to ongoing tightness in global fuel markets. The United States, for instance, is experiencing exceptionally high diesel prices. Disruptions to West Asian supplies and attacks on Russian refining infrastructure in Ukraine are further tightening refined-fuel availability, prompting discussions in Washington, including potential restrictions on diesel exports by US President Donald Trump, to address domestic consumer and lawmaker concerns over rising fuel costs.