Gulf Oil Exports Top 24 Million Barrels a Day as Shipping Costs Soar

Gulf oil exports have recovered beyond their pre-conflict volume, but the extra barrels are moving through a costly, higher-risk transport system. Kpler data puts shipments through the Strait of Hormuz and alternative routes above 24 million barrels per day in the week ending October 18, compared with 23.3 million barrels before the conflict. For refiners, the volume rebound has not brought shipping economics back to normal.

The recovery relies on several routes and operating changes: oil still moving through Hormuz, pipelines diverting cargoes to other terminals, and ship-to-ship transfers that connect short-haul tankers with vessels bound for longer voyages. A Wall Street Journal study published October 21 described this system, developed by producers and tanker operators, as central to restoring exports despite continuing attacks.

Hormuz carries less of the flow

Kpler’s preliminary data puts oil passing through Hormuz and transferred offshore in the Gulf of Oman at about 14 million barrels per day. That is 82% of the pre-conflict level. Tankers continue to cross the strait despite missile and drone threats; the source reports that movements supervised by the U.S. Navy are helping maintain the flow.

At the same time, Saudi Arabia and the United Arab Emirates are routing oil through alternative pipelines to terminals on the Red Sea and Gulf of Oman. Before the conflict, 83% of regional crude passed through Hormuz, Kpler found. In September, about 40% of regional exports excluding Iran avoided the strait. That shift gives exporters another way to reach buyers, while changing where tankers load and how cargoes are assembled for onward transport.

Ship-to-ship transfers add handling and time

A growing share of the movement depends on shuttle operations. Tankers load crude at Gulf ports, carry it through Hormuz to the Gulf of Oman, then transfer it at sea near Fujairah or Sohar to larger vessels making long-distance trips. The arrangement separates the strait crossing from the ocean voyage, but adds a transfer step and ties up vessels in repeated short-haul runs.

More than 70% of crude that passed through Hormuz in August was transferred to another tanker at sea, according to Kpler. Very large crude carriers, or VLCCs, are prominent in these operations. Some vessels reportedly work on cycles of about 16 days within the Gulf. Keeping oil moving this way has helped restore access to international markets, though it reduces tanker utilization and raises transport costs.

Freight and insurance cut into refining margins

Higher freight charges and conflict-related insurance costs are weighing on Asian refiners. Reuters reported on October 19 that these expenses, which typically make up 3% to 7% of crude delivery costs, reached as much as 30% for some shipments. A cargo’s delivered cost can therefore rise sharply even when export volumes are recovering.

Asian refiners’ average gross refining margin was about $40 per barrel in October, but fell to just above $7 after freight costs were deducted. Some Middle Eastern producers have offered Asian buyers discounts of up to $30 per barrel to offset the burden. Reuters’ account points to a split between the recovery in Gulf export volumes and the returns available to refiners; transport expenses are also pressing on producer revenue.

Vessel threats extend into the Gulf of Oman

Higher traffic has not eased the danger to commercial shipping. Reuters reported on October 21, citing Kpler data, that 18 vessels had been attacked in the region over the preceding two weeks. The threat has also extended beyond Hormuz into the Gulf of Oman. Maritime intelligence company Marisks had previously warned that increased tanker movements were raising vessel security risks.

Two incidents illustrate the exposure. On October 1, the VLCC Kazimah III caught fire after being struck by an object in Hormuz. On October 4, the Liberia-flagged tanker Lipsi sustained engine-room damage in an attack. The crews of both vessels survived, according to the source. The incidents add practical consequences for operators weighing routes, insurance and vessel deployment.

Crude prices rise despite the export rebound

Restored Gulf volumes have not stopped crude prices climbing. Brent rose above $110 a barrel on October 21, nearing its highest level in almost five months, while U.S. West Texas Intermediate traded around $99. Reuters cited risks in Hormuz, attacks on Saudi Arabia and falling U.S. oil stocks as factors behind the rise. The market response suggests that available export volume alone does not settle concerns about continuity of supply.

Kpler said in an October 1 assessment that a broad political agreement is no longer the sole route to restoring transport through Hormuz. Producers, tanker operators and logistics organizations have built an operating model that can keep crude moving amid continuing conflict. Its durability remains uncertain, and refined products and liquefied natural gas have lagged the recovery in crude exports.

Kpler expects security threats to keep freight costs elevated and says a full return to normal transport will take time. For cargo planners, the key distinction is between barrels available for export and the cost and risk of delivering them. Crude flows have recovered; tanker capacity, insurance and onward transport remain the constraints to watch.

Source: SeaNews Türkiye