Crude shipments through the Strait of Hormuz have partly recovered to prewar levels as Gulf producers launch shuttle voyages to keep exports moving despite Iranian military threats. In the Red Sea, by contrast, widening bombardment between Houthi rebels and Saudi Arabia is expected to push even more demand toward Hormuz.
Saudi Arabia and other Gulf oil producers are sustaining exports by sending very large crude carriers inside the Strait of Hormuz to load at port, then transferring the cargo to other vessels waiting outside the strait, a method known as ship-to-ship transfer, The Wall Street Journal reported on the 5th. Because the transfers take place at sea rather than at a port, the origin of the cargo is easy to disguise.
Similar transfers are taking place in Russia to work around the war in Ukraine. Diesel refined in South Korea was loaded onto vessels under European Union sanctions and shipped to Russia on 14 occasions in July and August this year, Britain's Guardian reported.
A single shuttle voyage is said to cost $30 million to $40 million, or roughly 40.3 billion to 53.7 billion won, reflecting charter rates and labor costs inflated by hazard pay. One crewing company offered bonuses of up to $25,000, about 34 million won, for a round-trip voyage. Seven vessels have been attacked near the Strait of Hormuz since the 28th of last month, according to the United Kingdom Maritime Trade Operations and other sources.
Even so, the seven-day average of crude exports through the strait stood at 18.3 million barrels a day as of the 30th of last month, according to ship-tracking firm Kpler. That exceeded the prewar daily average of 18 million barrels. Exports topped prewar levels on 14 days in September. Brent crude for December delivery settled 1.89% lower at $100.32 a barrel, while West Texas Intermediate for November delivery fell 1.84% to $89.43 a barrel.
Rising tension in the Red Sea, the other main crude shipping route, is expected to keep Hormuz busier for some time. A Saudi-led coalition has retaken Dubab and Bab al-Hadid, strategic points north of the Bab el-Mandeb Strait in the Red Sea, from Houthi rebels, foreign media reported on the 5th. The Houthis said they had seized Turbah, a key government stronghold. Turkey and Pakistan have agreed to deploy troops to Saudi Arabia quickly under a joint Mecca defense pact, signaling a widening front.
