Hormuz Tanker Traffic Slumps as Saudi Arabia Scrambles for New Oil Routes

Only four commodity vessels were detected to have moved inbound or out of the Strait of Hormuz on Thursday, shipping data showed early on Friday, while oil shipping options out of the Middle East became fewer with the closure of the Saudi pipeline to the Red Sea port of Yanbu. Three vessels moved into the Persian Gulf, and one exited the Strait on Thursday, down from the 10-day average of as many as 16 ships daily transiting the chokepoint, according to preliminary data from Kpler cited by Reuters. The tracking excludes any movements of ships that have switched off their positioning systems to avoid detection or becoming targets of attacks. Owners and energy exporters are becoming increasingly careful navigating through the Strait of Hormuz amid re-escalation of hostilities this month, including strikes on tankers, the threat from the Iran-aligned Houthis in the Red Sea, and the temporary shutdown of the East-West onshore pipeline in Saudi Arabia. Tanker traffic at the Strait of Hormuz has recovered to about half to two-thirds of pre-war levels, according to various estimates by analysts and satellite tracking services. But it’s still below pre-war levels, while threats to the traffic at the Bab el-Mandeb Strait have just intensified as the Iran-aligned Houthis moved to control key islands on the chokepoint of the southern Red Sea. Traffic just outside Hormuz, however, is surging, as Saudi Arabia has turned to selling millions of barrels of crude oil in the spot market to be picked up from offshore Oman just outside the Strait of Hormuz. The Kingdom was forced to rely more on Hormuz shipping after it shut down the key onshore pipeline that helps it bypass the chokepoint. The Saudis are selling the cargoes for pickup and loading for this month and next onto other vessels outside the Strait of Hormuz. This means buyers will not be sending tankers into the Persian Gulf via Hormuz, but will load the cargoes in ship-to-ship (STS) transfers in the Gulf of Oman. By Tsvetana Paraskova for Oilprice.com More Top Reads From Oilprice.com

Tanker traffic in the Strait of Hormuz remains a fraction of pre-war levels, with four vessels traversing the waterway on Tuesday, down from seven the previous day, Reuters has reported, citing ship-tracking data. The data does not include tankers that have turned off their geolocation devices, the publication noted. Meanwhile, Windward reported just one tanker entering the Strait of Hormuz on September 15th—an oil product carrier. Per the data cited by Reuters, two tankers entered the chokepoint on Tuesday, and two exited. None of the four were very large crude carriers or LNG carriers, Reuters noted. One carried liquefied petroleum gas, and another was loaded with naphtha. The 10-day moving average was 18, according to the publication. Owners and energy exporters are becoming increasingly careful navigating through the Strait of Hormuz amid re-escalation of hostilities, strikes on tankers, and the relatively new threat from the Iran-aligned Houthis in the Red Sea, targeting Saudi shipments. The latest Houthi attack on Saudi Arabia’s vital East-West pipeline has led to crude oil loading cancelations from Yanbu. Because of the attack, there are reports that Saudi Arabia is looking to raise shipments via the Strait of Hormuz, as the Houthis have expanded their control over the Bab el-Mandeb strait. Whether that would be possible in light of the latest crossing numbers is doubtful. Reports about the length of time it would take Aramco to fix the East-West pipeline range from a few days to several weeks. The rate of tanker traffic via the Strait of Hormuz has been declining for a couple of weeks now, from 10-day moving averages of double digits to less than 10 over the past few days. Even if there are as many tankers crossing Hormuz in dark mode as there are tankers moving through it visible, rates remain severely subdued. By Irina Slav for Oilprice.com More Top Reads From Oilprice.com

Ship traffic through the Strait of Hormuz slumped to single digits on Thursday, down from a 10-day average of 15 vessels that transited the chokepoint in both directions, Reuters reports, citing preliminary vessel-tracking data by Kpler as of early Friday. Only seven vessels, two outbound and five inbound, transited the Strait of Hormuz over the past 24 hours, per the data, which tracks only ships with positioning systems switched on. Dark transits are believed to be much higher as vessel operators and commodity buyers prefer to switch off their ships’ AIS systems to avoid detection and being targeted in the Strait of Hormuz. Owners and energy exporters are becoming increasingly careful navigating through the Strait of Hormuz amid re-escalation of hostilities, strikes on tankers, and the relatively new threat from the Iran-aligned Houthis in the Red Sea, targeting Saudi shipments. Oil prices this week jumped above $100 per barrel and were on track early on Friday to end a trading week above the $ 100-a-barrel mark for the first time since May. Hostilities in the Middle East continue, and the prospects of peace talks between the United States and Iran appear more remote than a few weeks ago. “Oil’s resilience reflects a market now repricing both the duration and severity of the conflict, along with a clearer recognition of the mounting threat to regional supply,” ING’s commodities strategists Warren Patterson and Ewa Manthey wrote in a note early on Friday. “While meaningful volumes are still moving through the Strait of Hormuz, flows remain well below pre-war levels, underscoring how fragile the situation has become,” the strategists added. Most estimates put crude oil and petroleum product volumes exiting the Strait at about 10 million barrels per day (bpd), of which 9 million bpd is crude. Yet, these volumes remain half of pre-war levels, while fuel supply remains severely limited, further weighing on the very tight middle distillate markets. By Tsvetana Paraskova for Oilprice.com More Top Reads From Oilprice.com