Hormuz Oil Flows Surge as Iran Loses Its Leverage

Could the great oil crisis finally be starting to break? Hormuz oil flows are suddenly surging again as Iran appears to be losing its grip on the world’s most important energy chokepoint. Months after the war sent crude prices soaring and disrupted tanker traffic through the Persian Gulf, the U.S. Navy and Gulf producers are increasingly succeeding in moving massive volumes of oil despite Tehran’s efforts to control the Strait of Hormuz. The result: Middle Eastern crude exports have rebounded to almost 13 million barrels per day, while Iran’s own oil lifeline is rapidly drying up.

According to shipping-data firm Kpler, exports through Hormuz and alternative routes have recovered to almost 80 percent of their prewar level. Before the U.S.-Israeli war with Iran erupted in February, the region shipped nearly 19 million barrels of crude per day. The latest recovery is already being felt on global markets: Brent crude fell almost 2 percent Tuesday to around $103 per barrel, as traders reacted to rising supplies from Saudi Arabia, the United Arab Emirates and other Gulf producers.

Hormuz oil flows roar back

“The producers are now taking on the risk of moving oil through the Strait of Hormuz,” oil expert Andrew Lipow told America Report. Gulf exporters have hired additional Very Large Crude Carriers, or VLCCs — giant tankers capable of carrying roughly two million barrels each — to push more crude through the dangerous waterway.

Lipow says the shift has dramatically weakened Tehran’s position:

“Combined with the U.S. blockade of Iranian oil exports, Iran has lost leverage in the oil market.” However, he cautions that the advantage could disappear quickly: “That leverage could quickly return if Iran were to successfully target these tankers or other oil infrastructure in the Middle East.”

Saudi Arabia has delivered another boost to global supply by restarting its strategic East-West Pipeline, which moves crude across the kingdom to the Red Sea and therefore bypasses Hormuz entirely. Oil loading has resumed at the Saudi port of Yanbu at roughly two million barrels per day, while pipeline throughput has climbed to around 2.65 million barrels daily and could rise further. The pipeline had been shut after drone attacks earlier this month.

Iran’s own oil is trapped

For Tehran, meanwhile, the picture is becoming increasingly grim. The U.S. maritime blockade of Iranian ports remains in place, preventing Iran from freely moving its own crude through Hormuz even as rival Gulf states restore their exports. Oil is Iran’s most important source of hard currency, making the blockade one of Washington’s most powerful economic weapons.

Iran had built up crude aboard tankers outside the blockade, much of it destined for China. But that floating stockpile has fallen from roughly 29 million barrels in early September to around 15 million barrels. Kpler estimates that the remaining supply could be depleted by early to mid-October.

Treasury Secretary Scott Bessent (64) is even more dramatic. He said Iran could complete its remaining deliveries to China within “the next two weeks.” After that, Bessent said, Tehran could have “nothing left to trade for anything.”He claimed between 15 million and 22 million barrels of oil are now successfully moving through Hormuz each day while Iran itself exports virtually nothing through the waterway.

Could the energy crisis finally ease?

The reversal is significant because control of Hormuz had been one of Tehran’s biggest bargaining chips. Around one-fifth of the world’s oil normally passes through the narrow strait. When Iran disrupted shipping earlier in the war, supplies tightened, crude surged and American consumers felt the shock through higher gasoline and diesel prices.

Now that equation is changing. Saudi Arabia has reopened its western export route. The UAE continues using infrastructure that bypasses Hormuz. More giant tankers are risking the passage. And U.S. naval operations have made it increasingly difficult for Iran to shut the route completely.

Lipow sees another potentially important explanation: Iran may simply have lost much of its ability to attack tanker traffic successfully. “The very real possibility also exists that Iran’s ability to attack tankers has been seriously downgraded by the USA,” he said.

If that proves correct, Lipow believes the improvement could continue even without a formal peace agreement: “Persian Gulf oil exports may continue to increase.”

But one successful attack could change everything

That is the hopeful scenario. The dangerous one is that Iran, increasingly cornered economically, decides it has to escalate.

Analysts have warned that diminishing returns from Tehran’s Hormuz strategy could create an incentive to strike tankers, refineries, ports or pipelines in an attempt to restore its leverage. Iran-backed forces have already demonstrated that alternative routes are vulnerable: attacks temporarily shut Saudi Arabia’s East-West Pipeline, while Houthi threats continue to complicate Red Sea shipping.

That is why oil prices remain above $100 even after the latest decline. Brent fell to around $103.32 Tuesday, but it was still heading toward a roughly 14 percent monthly gain. Traders are pricing in both realities at once: significantly more oil is reaching the market, yet the threat of another devastating attack remains.

For consumers battered by months of expensive gasoline, diesel and transportation costs, however, this is the clearest positive development in weeks.

Iran’s oil weapon is weakening. Gulf exports are climbing. Saudi Arabia’s bypass is working again. And increasingly large fleets of tankers are making it through Hormuz.