Seven months of Hormuz blockade: Oil is still flowing—but becoming increasingly expensive and fragile.

A costly floating transshipment system is barely sustaining global energy supply, yet it remains unclear whether this emergency mechanism is a temporary stopgap or the new normal. The blockade of the Strait of Hormuz has entered its seventh month. Middle Eastern oil producers are maintaining exports via a ship-to-ship (STS) transshipment system—but the logistical costs of this arrangement are surging sharply. According to Kpler data, exports through the Strait have rebounded since September to around 6.5 million barrels per day—the highest level since a brief post-ceasefire recovery in June. Yet behind this export volume lies an unprecedented logistical burden. Per LSEG data from Reuters, the benchmark freight rate for Very Large Crude Carriers (VLCCs) transporting Gulf crude to China has soared to over $30 per barrel—the highest on record. Before the war, such freight costs accounted for only 2–3% of oil prices; now, with crude trading near $105 per barrel, freight alone exceeds one-quarter of total delivered cost. Last week, Brent crude briefly breached $108 per barrel—partly driven by market jitters over disrupted Saudi export routes. Energy markets are adapting—not collapsing—but that adaptation comes at a price borne collectively by producers, shipping markets, and global consumers. How the floating transshipment chain works The Strait’s blockade has forced oil producers to redesign export routes. ADNOC (Abu Dhabi National Oil Company) launched the STS scheme as early as April: using vessels as “shuttle tankers” to carry crude from Gulf terminals to safer waters in the Gulf of Oman, where cargo is transferred to larger vessels bound primarily for Asian refineries. The mother vessel then returns through the Strait of Hormuz to reload—repeating the cycle. This mechanism reduces per-voyage risk by shortening transit distances across the Strait while maximizing utilization of scarce—and expensive—tanker capacity, thereby preserving some critical export flows. Increasing numbers of tankers are now transiting the Strait under U.S. naval escort, navigating via a narrow corridor near Oman’s coastline with navigation systems switched off. Saudi Arabia follows suit—and scales up rapidly What began as an ADNOC-led emergency measure has evolved into a sizable nascent industry, with Saudi Aramco increasingly reliant on STS transshipment to sustain exports.

Demanding restoration of the Strait of Hormuz: Can Saudi Arabia deliver?

Iran’s foreign minister addressed the U.S. at the UN General Assembly, declaring that the Strait of Hormuz would reopen within seven days if Washington accepted all Iranian demands. Trump flatly rejected the offer—and reportedly told aides privately that he would resume bombing Iran after the midterm elections. Yet the first to react with alarm was not the U.S., but Saudi Arabia. On September 26, Saudi Foreign Minister Faisal stated at the UN General Assembly that the Strait of Hormuz must be restored to its pre-February 28 status: no additional fees, no passage restrictions. He also explicitly named the Bab el-Mandeb Strait, the Red Sea, and the Gulf of Aden—opposing any attempt by any party to leverage international waterways for political coercion. What Saudi Arabia seeks is not merely permission for a few ships to pass—it demands full restoration of normal, rule-based maritime operations. Why is Saudi Arabia so urgent? Because both of its vital oil arteries are now constricted. For instance, Saudi Arabia’s eastern oilfields lie adjacent to the Persian Gulf; crude loaded at ports like Ras Tanura must traverse the Strait of Hormuz en route to overseas markets. According to the U.S. Energy Information Administration, in 2024 Saudi exports via the Strait—including crude and condensates—averaged roughly 5.5 million barrels per day, constituting a major share of total Strait-related traffic. For Riyadh, the Strait’s operability directly determines daily export volumes. After hostilities erupted, this route became hazardous—not entirely impassable, but shipowners weighed attack risks, insurers assessed payout exposure, and buyers factored in delivery delays. Preliminary tracking data released on September 22 showed only two cargo vessels recorded transiting the Strait the previous day. Pre-war, about 125 large commercial vessels passed through daily. Some ships likely switched off transponders, so tracking figures alone cannot capture full traffic—but there is no doubt the shipping order has suffered severe disruption. Saudi Arabia does possess an alternative: the East-West Crude Pipeline, which transports oil from eastern fields to the Red Sea port of Yanbu—bypassing the Strait entirely. With a maximum capacity of approximately 7 million barrels per day, this pipeline had long served as a key buffer against Strait-related risks. But in September, the pipeline came under drone attack—causing temporary shutdowns and disrupting crude loading at Yanbu. Consequently, Saudi Arabia ramped up shipments from eastern ports: data shows average daily oil exports via the Strait reached nearly 2.9 million barrels during mid-September—far exceeding August’s ~700,000 barrels. Though the pipeline later resumed operation, damaged infrastructure remains under repair. Just as Riyadh sought to shift more volume westward, its Red Sea route faltered; reverting to the Persian Gulf, however, meant confronting renewed insecurity in the eastern Strait. More critically, the Red Sea route faces persistent Houthi threats: the Houthis claim responsibility for missile and drone strikes targeting Saudi assets; Saudi authorities report intercepting incoming weapons—but whether specific targets were hit remains disputed between the two sides. For oil shippers, sustained attack risk alone suffices to disrupt scheduling and inflate freight rates. Saudi Arabia thus confronts simultaneous pressure on both export corridors. That is precisely why Faisal insists on ‘restoring the pre-war status’: allowing tankers to transit under naval escort differs vastly from permitting them to sail freely on regular schedules. The former may clear a single shipment; the latter enables stable production, sales, and deliveries. Riyadh also rejects any new fee or approval regime—if every Strait crossing hinges on third-party conditions, today’s export clearance offers no guarantee for tomorrow’s.

No Lights, No Radio: Getting Oil Through Hormuz Is a Risky Job

Oct 1, 2026

Oil tankers navigate the Strait of Hormuz under US military protection amid geopolitical tensions, ensuring critical crude flows continue despite attack risks. JPMorgan estimates daily flows near pre-war levels, highlighting the strategic importance of these hazardous voyages.

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No Lights, No Radio: Getting Oil Through Hormuz Is a Risky Job

No Lights, No Radio: Getting Oil Through Hormuz Is a Risky Job

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