Gulf Nations Keep Oil Flowing Despite Iran War as Costs Mount

Strait of Hormuz Closures and Pipeline Workarounds

When Iran shut down the Strait of Hormuz at the start of the conflict, approximately 15 million barrels of daily oil passage were cut off, sparking early fears of economic collapse, according to independent.co.uk. Saudi Arabia and the United Arab Emirates countered the blockade by routing supplies through spare pipeline capacity. Saudi Aramco directed crude through its East-West pipeline to the Red Sea port of Yanbu, where tankers sailed toward Asia via the Bab el-Mandeb Strait, while ADNOC utilized a UAE pipeline cutting across Oman to Fujairah. However, those secondary routes faced subsequent disruptions. In July, Iranian-backed Houthi rebels in Yemen declared a blockade on Saudi shipments near the Bab el-Mandeb Strait, prompting Saudi Arabia to redirect Asian shipments northwest to the Mediterranean through the Suez Canal or across an Egyptian pipeline for a lengthy detour around Africa, as reported by abcnews.com. Earlier this month, an attack forced the total shutdown of the East-West pipeline itself, potentially for weeks.

Dark Shuttles and U.S. Naval Escorts

To bypass the blocked Persian Gulf waters, oil exporters also turned to a U.S.-supervised maritime corridor near Oman starting in May. According to abcnews.com, ship operators defying Iranian demands utilized a dark shuttle route at night with their location systems and mobile phones turned off, offloading oil to waiting tankers outside the strait. Shipping data from Kpler cited by abcnews.com showed that on a recent Monday, six supertankers loaded 12 million barrels at Saudi terminals on the Persian Gulf. Adm. Energy data firm Rystad Energy estimates that between 6 million and 7 million barrels per day have recently passed through the southern dark route and the Strait of Hormuz, accounting for roughly 40% or more of prewar flows.

Market Strains and Diminished Leverage

While current crude prices remain near $100 a barrel—higher than prewar levels but well below worst-case projections—analysts warn that the current supply balance is fragile. According to independent.co.uk, drawing down existing commercial oil stocks, particularly in China, has helped stabilize prices, but that reserve drawdown cannot continue indefinitely. Meanwhile, U.S. naval blockades and strict economic sanctions continue to smother Iran’s own economy, limiting Tehran’s overall leverage even as its military operations and proxy attacks impose heavy logistical costs on its neighbors.