Middle East crude oil exports have recovered to almost prewar levels, according to estimates from major banks and tracking firms, but a recent increase in attacks on commercial vessels in the Gulf is keeping shipping and insurance costs high and preventing the market from returning fully to normal.
JPMorgan said this past week that Middle East crude exports reached about 17.5 million barrels per day, or 98% of prewar levels. Goldman Sachs was more bullish, estimating that exports from Persian Gulf producers hit 19 million barrels per day. Kpler also declared that Gulf crude exports have recovered to prewar levels, though it put the September figure at at least 16.5 million barrels per day.
The recovery has reshaped regional oil logistics. Kpler noted that around 40% of crude now leaves without crossing the Strait of Hormuz, up from 17% before the war, as Saudi Arabia and the UAE make greater use of pipeline routes. Of the crude that crossed Hormuz in August, more than 70% changed tankers offshore. The volumes have recovered, but through a fundamentally different export system.
The rebound in Gulf oil flows has come despite a U.S. naval blockade that has kept Iran’s exports at essentially zero. President Donald Trump and others in his administration have touted the numbers, boasting that the U.S. now controls the strait and predicting Iran’s economy will soon come completely undone.
But analysts have warned that the Iranian regime, facing an existential threat to its rule, could re-escalate the war and reassert its grip on the oil trade. Attacks on commercial ships in the Gulf have been on the rise in recent days. While the U.S. military is protecting ships and has degraded Iran’s ability to target them, drones and missiles still find their marks on occasion.
The attacks have not deterred all tankers from making the risky transit, but they keep shipping and insurance costs high, preventing the market from fully returning to normal. Esfandyar Batmanghelidj, founder and CEO of the Bourse & Bazaar Foundation think tank, argued that Iran’s influence over the region’s energy trade is not limited to the Strait of Hormuz. He pointed out that Iran can still destroy oil infrastructure, such as drilling and refining capacity, and can escalate if Trump is not feeling enough pain to take the diplomatic off-ramps being put in front of him.
Indeed, Trump has rejected Tehran’s offer to restart talks with a seven-day ceasefire that would fully reopen the strait in exchange for the U.S. Meanwhile, the U.S. military continues to bolster its presence in the region. A U.S. official said the recently deployed USS Theodore Roosevelt aircraft carrier, as well as the USS Malkin Island amphibious readiness group — a group of ships that together carry over 7,000 sailors and 2,000 Marines — are heading for the region. The official said the move could result in three carriers in the region as early as the end of October.
While crude prices remain high, with refined fuels like diesel suffering an even worse shock, the recovery in Gulf oil flows has been achieved under the protection of the U.S. military. The situation remains fragile, with the threat of further escalation hanging over the market.