Oil: how exporters circumvent the blockage of the Strait of Hormuz

Faced with the persistent blockage of the Strait of Hormuz, oil exporting countries have found a solution. Export levels have returned to, or even exceeded, their pre-war levels in Iran. For example, Saudi Arabia, the largest producer, now transports its oil by pipeline to the Red Sea port of Yanbu, where it is then exported, up to seven million barrels per day.

The other method is more daring. It passes through the Strait of Hormuz, controlled by Iran, which regularly attacks ships passing through it. So, to escape the Iranian threat, exporting countries load the crude into so-called shuttle ships, which agree to take the risk of passing through Hormuz. These boats then leave the strait as discreetly as possible, under the protection of the American army. “We have convoys of ships passing the Strait of Hormuz at night with American protection. All the signals on the boats are turned off,” explains Homayoun Falakshahi, head of oil analysis at Kpler.

Once out of the strait, the ships transfer their goods to other tankers, which are responsible for transporting the oil to their destination. On satellite images taken on Sunday off the coast of Oman, we see a multitude of tankers practicing this transhipment technique. Thanks to these new methods, oil is once again circulating abundantly in the Middle East.

“The bottleneck on diesel production remains intact”

And yet, at the pump, the drop in prices is barely noticeable. But then why are prices not falling on the markets? First, because we must distinguish crude oil from its refined products. “The bottleneck that exists in diesel production remains intact because refineries in the Middle East have been damaged,” specifies Jean-Louis Schilansky, former President of the Union Française des Industrie Pétrolières.

Instability in the region is weighing on prices. Last weekend, the Saudi oil pipeline was hit and this Monday evening again detonations were heard in Riyadh, the country's capital.