- Gulf oil exports have recovered sharply, but Standard Chartered says the underlying transport system remains far more constrained than headline production and export figures suggest.
Oil markets are getting more crude out of the Middle East, but Strait of Hormuz oil flows remain far from normal, according to Standard Chartered, challenging the idea that the region's supply disruption has largely ended.
A report published by on Oct. 5 said Gulf crude and condensate exports excluding Iran reached about 16.5 million barrels per day (bpd) in September when bypass routes through Fujairah and the Red Sea were included. That was broadly close to pre-war levels.
The more important figure, however, was the share moving through Hormuz. Only about 60% of those barrels crossed the strait in September, compared with 83% before the war, Standard Chartered estimated. That difference shows why higher export volumes do not necessarily mean the global oil transportation system has returned to normal.
The latest market data reinforces the distinction. Reuters reported Oct. 6 that Gulf flows excluding Iran averaged 19.2 million bpd in September across crude, condensate and refined fuels, versus roughly 23.6 million bpd before the conflict. Crude and condensate flows recovered to 91% of their previous level, while refined-fuel exports remained at only 60%.
Hormuz Oil Flows Recover Through Costly Workarounds
The recovery has depended on a much more complicated logistics network than the one used before the conflict. Standard Chartered said Gulf exporters have increased their use of pipelines, alternative ports and ship-to-ship transfers, in which cargoes are moved between vessels after passing through exposed sections of the Gulf. The bank said shuttle capacity appears increasingly stretched, while voyage times, freight costs and security expenses remain elevated.
The changes are particularly visible in Saudi Arabia. Standard Chartered estimated that Saudi exports rose to about 6.9 million bpd in September from 2.45 million bpd in August. The recovery followed disruptions to the kingdom's East-West pipeline, which forced more crude toward eastern export routes and through Hormuz.
Saudi Arabia has since resumed operations through the East-West Pipeline and Yanbu, providing another route toward international markets. Reuters reported Oct. 6 that oil flows through the pipeline had reached 5.8 million barrels, although the route remains important precisely because it reduces reliance on Hormuz.
The logistics strain is also visible in tanker markets. Reuters reported that VLCC rates for Middle East-to-Asia voyages recently exceeded $1.2 million per day, compared with roughly $30,000 in January. Freight costs that once represented about 3% of the delivered price of a barrel had risen to roughly 27%, according to the Reuters analysis.
That helps explain why oil prices can remain elevated even when physical crude exports improve. The issue is no longer simply how many barrels are available, but how reliably and economically those barrels can reach buyers.
Why Oil Prices Are Still Sensitive to Hormuz Disruptions
The market has already reacted to the improvement in exports. December Brent futures fell 0.4% to $99.88 a barrel Tuesday, while December West Texas Intermediate declined 0.8% to $87.54, according to The Wall Street Journal.
Reuters later reported Brent at $98.62 and WTI at $87.60 as Gulf exports improved and the G7 moved toward a 100-million-barrel emergency stockpile release. But lower crude prices do not mean the supply system has normalized. The latest Middle East oil export recovery is being achieved through routes and shipping arrangements that remain vulnerable to attacks, insurance costs and limited tanker availability.
That is important for investors watching the relationship between crude prices, energy stocks and inflation. The recent oil rally above $100 demonstrated how quickly geopolitical risk can feed into markets, while higher energy costs have also contributed to pressure on Treasury yields.
Refined products present another weakness. Reuters found that Gulf refined-fuel exports were still only 60% of pre-war levels in September, contributing to tight diesel and jet-fuel markets even as crude exports recovered.
The distinction matters because the Strait of Hormuz is not simply a crude-oil route. It is a critical energy chokepoint whose disruption can affect crude, refined fuels, shipping capacity and insurance simultaneously.
Recent Hormuz oil-flow data therefore points to a market that has adapted rather than one that has fully recovered. Gulf producers have demonstrated that they can move substantially more crude despite the conflict, but Standard Chartered's assessment suggests the system remains less efficient, more expensive and more exposed to another disruption than it was before the war.
For oil traders, the next test is whether higher export volumes can be sustained while tanker traffic, bypass infrastructure and security conditions remain under pressure. Reuters reported that daily flows remain considerably more volatile than before the war, making the durability of the recovery a central question for the crude market.