Following the outbreak of war between the U.S. and Israel against Iran, Tehran launched a series of attacks on commercial vessels in the Strait of Hormuz, aiming to disrupt one of the world's key oil supply routes. Initially, these attacks led to a dramatic drop in Iranian crude exports, which fell nearly 90% to 1.8 million barrels per day in March.
However, over the past eight months, crude flows have rebounded significantly, averaging nearly 11.1 million barrels per day in October, only slightly lower than September's figures. This resilience is attributed to enhanced U.S. military protection for tankers and the shipping industry's adaptation to the heightened risks.
In October alone, attacks on vessels have surged, with at least 30 incidents reported, doubling from September. Oil prices have reacted to the escalating violence, rising over 13% this month, with Brent crude trading near $117 per barrel.
The shipping industry has implemented a shuttle system to mitigate risks, allowing tankers to load crude at Persian Gulf ports and transfer it to other vessels outside the strait, although this method is costly and logistically complex. Freight rates have skyrocketed, with costs for hiring supertankers increasing from $249,000 to $931,000 per day within a month.
This surge in transportation costs is impacting profit margins for refiners in Asia, who are now facing freight expenses that constitute a significant portion of the delivered cost of crude. The sustainability of this shuttle system remains uncertain, particularly with the upcoming U.S. midterm elections potentially influencing military engagement in the region. The U.S.
Navy has advised vessels to avoid the area unless necessary, highlighting the precarious nature of maritime operations in the Persian Gulf