Gulf nations keep oil flowing despite Iranian attacks, but workarounds are costly

Gulf oil producers have maintained crude supply near $100 a barrel for seven months after Iran shut the Strait of Hormuz, using pipelines, clandestine tanker shuttles, and stockpile drawdowns. Analysts warn the fragile balance may not last as workarounds are costly and vulnerable to further attacks.

Gulf oil producers have kept crude flowing near $100 a barrel for nearly seven months after Iran shut the Strait of Hormuz at the start of the war, choking off sea passage for some 15 million barrels a day. Saudi Arabia and the UAE quickly turned to spare pipeline capacity — the Saudi East-West pipeline to the Red Sea port of Yanbu, and the UAE's pipeline across Oman to Fujairah — to bypass the strait. When Houthi rebels in Yemen declared a blockade of Saudi oil shipments in July, the Saudis redirected Asia-bound cargoes northwest to the Mediterranean via the Suez Canal or a pipeline across Egypt, then around Africa back to Asia. The East-West pipeline was attacked in early September and forced to shut down, potentially for weeks. The Saudis then shifted to a US-supervised dark shuttle route through the Strait of Hormuz, where ships operate at night with location systems off. On Monday, six supertankers loaded 12 million barrels at Saudi terminals on the Persian Gulf. Analysts estimate some 6 million barrels per day or more have been passing through the strait on the dark shuttle route — about 40% of prewar flows. The drawing down of commercial oil stocks, especially by China, has also helped keep prices in check. But analysts at Rystad Energy warn the workarounds are expensive and may not be sustainable, and Iran could yet gain an edge with continued attacks on key oil facilities.