Oil Flows Through Hormuz: Has Iran Lost Its Most Dangerous Negotiating Card?

Crude oil flows from the Middle East have returned almost to pre-war levels despite continuing risks to shipping, placing Tehran before a difficult challenge, as it uses the Strait of Hormuz as one of its most important and dangerous negotiating cards.

Analysts wrote in a memo dated September 29: "The arteries of oil exports in the Middle East have returned to flowing." They added that this represents a "remarkable recovery for a region still at war," although the recovery has been uneven.

A Recovery That Embarrasses Tehran

Crude oil shipments recovered to 17.5 million barrels per day, or 98% of pre-war levels, while flows of products such as diesel and gasoline reached 3 million barrels per day, or 58%, according to JPMorgan.

US President Donald Trump confirmed on his part that "quantities of oil were removed from the Strait of Hormuz, in larger volumes than was the case before the war."

In this regard, Matt Smith, Head of Commodity Research at Kpler, said that "given these large volumes crossing the strait, it is clear that Iran is losing its influence over it," as reported by CNN.

According to him, "this achievement is the fruit of a complex operation involving shuttle transfers under military protection, including covert passage - known as 'dark transit' (without electronic tracking) - through the strait; which helped restore significant flows of Middle Eastern oil during the past two months."

What increased traffic in the strait recently was the return of Saudi oil flow, which had been primarily rerouted towards the Red Sea, before the Houthis in Yemen launched an attack on the main Saudi east-west oil pipeline earlier this month.

According to CNN, "the fundamental question remains: how long can this status quo last? The US military dedicates enormous resources in the region just to ensure the passage of oil, while global inventories continue to decline approaching their lowest operational levels, fuel prices remain at record or near-record levels, and Iran - which has been put in a critical corner - has begun to respond and try to regain the initiative."

Anticipation and Tension

According to CNN, the oil market still appears to possess unlimited solutions and means to deliver oil to customers, despite the world being exposed to the largest supply shock ever, as global oil stocks fell by about two billion barrels during the period of the war related to Iran.

It considered that "the market withstood these challenges and achieved this remarkable feat through innovative solutions such as changing pipeline routes and militarily supported shuttle services, in addition to increased production from outside the Gulf region, and above all else, the significant global decrease in demand."