Gulf nations have found ways to keep oil flowing through the Iran war,
but the costs are mounting
[September 24, 2026] By
DAVID McHUGH
FRANKFURT, Germany (AP) When Iran shut down the Strait of Hormuz at
the start of the war, choking off sea passage for some 15 million
barrels of oil a day, many feared that prices would skyrocket, cratering
the world economy.
Instead, nearly seven months on, oil is expensive but not exorbitant,
and analysts say there's enough oil available to meet current global
needs, even as the higher prices cause political problems for U.S.
President Donald Trump and others.
That's because Saudi Arabia and other Gulf producers quickly found
alternative routes and reached for unused pipeline capacity. When Iran
and its militant allies targeted those, the oil exporters and the U.S.
military found still other ways workarounds for the workarounds in
an often clandestine game of whack-a-mole.
With oil now at around $100 a barrel higher than before the war but
not as bad as feared Iran has diminished leverage, while a U.S. naval
blockade and tightened sanctions smother its own economy.
But the workarounds are expensive and may not be sustainable. The
drawing down of existing commercial oil stocks especially by China
has also helped keep prices in check, but cannot continue indefinitely.
And Iran could yet gain an edge with continued attacks on key oil
facilities.
Pipeline backups were ready
Iran began attacking ships in the Strait of Hormuz in response to the
U.S.-Israeli bombardment that started the war. In response, the Saudis
turned to their East-West pipeline that carries oil to their Red Sea
port of Yanbu.
From there, tankers headed out through the Bab el-Mandeb Strait toward
Asia. Likewise, the United Arab Emirates used its pipeline cutting
across neighboring Oman to Fujairah a route that skirts the strait.
Both pipelines had spare capacity, and the UAE's state oil company ADNOC
and Saudi Aramco used it to keep exports from collapsing completely
during the first weeks of the war.
Meanwhile, some oil leaked out of the Strait of Hormuz. In May, ship
operators willing to risk Iranian attack started taking advantage of a
U.S.-supervised route near Oman, defying Iran's demands to use its own
vetted route. They shuttled back and forth at night with location
systems and mobile phones turned off, and offloaded to tankers waiting
outside the strait. Flows from Kuwait, Iraq, and the UAE started to rise
again.
But Iranian-backed Houthi rebels in Yemen disrupted the Yanbu workaround
in July by declaring a blockade of Saudi oil shipments, threatening the
Bab el-Mandeb a repeat of the Hormuz disruption.
In response, the Saudis redirected Asia shipments northwest to the
Mediterranean, either through the Suez Canal or for tankers too big to
use it a pipeline across Egypt to another tanker. The oil then made a
huge detour as it was shipped around Africa and back to Asia.
Then the East-West pipeline was attacked earlier this month and forced
to shut down, potentially for weeks.
The Saudis shift to the US-protected dark shuttle through Hormuz
With oil loading halted at Yanbu from Sept. 11, the Saudis shifted
again, joining other Gulf producers sending oil through the U.S.-guided
corridor in the Strait of Hormuz. On Monday, six supertankers loaded 12
million barrels at Saudi terminals on the Persian Gulf, according to
shipping data company Kpler.
U.S. officials have touted the role of the southern corridor in keeping
energy flowing while their blockade increases pressure on Iran. Adm.
Brad Cooper, head of U.S. Central Command, said in a video on social
media Saturday that U.S. forces had assisted 2,000 commercial ship
transits and the transport of more than 1 billion barrels of oil from
Gulf partner nations over the past couple of months.
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A worker collects engine oil as he works at a degassing station in
Zubair oil field, whose operations have being reduced due to the
Mideast war triggered by the U.S. and Israeli attacks on Iran, near
Basra, Iraq, Saturday, March 28, 2026. (AP Photo/Leo Correa, File)
 Analysts estimate some 6 million
barrels of oil per day or more have been passing through the Strait
of Hormuz on the dark shuttle route on average some 40% or more of
prewar flows.
The workarounds keep the economy supplied, for now
Rahul Choudhary, vice president of upstream research at energy data
firm Rystad Energy, did the math as follows: With 6 million or 7
million barrels per day now flowing through the southern route, plus
2 million barrels through the pipeline to Fujairah, fully 8 million
or so of the blocked 15 million barrels per day from before the war
have been restored.
That still leaves roughly 7 million barrels per day missing from
prewar flows.
But wait: About 3.5 million barrels per day are being drawn down
from the globe's abundant oil inventories. Meanwhile, demand has
fallen by perhaps another 5 million barrels per day, due to the
higher price and sluggish economic growth in key markets. Add in
500,000 to 700,000 barrels per day from other suppliers such as the
U.S., and that pretty much evens out the global oil market.
Our take is that the market is very tightly balanced, Choudhary
said. That is why you are not seeing exceptionally high prices for
crude; they are still in the $100 range, and they have not touched
$140-$150 per barrel which could have been the case if there was a
deficit of 5-6 million barrels.
In fact, Rystad foresees oil at $85-$90 per barrel in the last three
months of the year, and falling to $80-$82 next year if Hormuz is
reopened.
But the workarounds are costly and not a permanent fix
The workarounds are time-consuming and expensive.
Sending oil to Asia through the Suez Canal instead of the Red Sea
can add as much as a month to the voyage. Meanwhile, the Hormuz
shuttle trade involves expensive tankers waiting at least a day and
a half in the Gulf of Oman for the ship-to-ship transfer.
The demand for supertankers has sent charter rates normally
$30,000 to $50,000 per day through the roof. Spot charter rates
for Hormuz transits reached $1 million per day on Sept. 11,
according to maritime data company Windward, equivalent to roughly
$26 per barrel. That means shipping is a quarter of the cost,
instead of the usual 1% to 3%.
And markets are braced for further disruption. The attack on the
East-West pipeline has shown pipelines can be vulnerable. Iran could
try to disrupt the U.S. route through the Strait of Hormuz or target
areas near the Omani coast where the ship-to-ship transfers are
taking place.
If that happens, the workaround would be to do the transfers farther
away taking more time and running up even bigger bills.
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