Persian Gulf Oil Exports Surpass Prewar Levels, but Shipping Costs Keep Soaring

Oil exports from the Persian Gulf have surpassed levels recorded before the Iran war, as U.S. protection, alternative pipelines and lucrative shipping deals keep crude moving despite attacks on tankers.

The recovery, however, has yet to deliver relief on prices. Brent crude remains above $100 a barrel, while transportation and insurance expenses have surged, adding costs to shipments that must navigate the Strait of Hormuz.

Middle East oil flows through Hormuz and alternative regional routes averaged more than 24 million barrels daily during the week ended October 18, according to The Wall Street Journal, which cited ship-tracking company Kpler. That exceeded the prewar average of 23.3 million barrels.

However, traffic through the Hormuz Strait itself remains below its previous level. Preliminary Kpler figures put flows through the strait, including offshore transfers in the Gulf of Oman, at approximately 14 million barrels daily, equivalent to 82% of prewar volumes.

The broader rebound reflects an expanding network of routes and shipping arrangements that has reduced Iran's ability to interrupt its neighbors' exports, even as vessels face serious danger.

Saudi and Emirati pipelines have helped redirect supplies. In September, approximately 40% of non-Iranian crude leaving the Gulf bypassed Hormuz, compared with 17% before the war.

At sea, some tankers operate as shuttles, collecting oil inside the Gulf and carrying it through Hormuz before transferring cargoes to other vessels near Oman. Those receiving ships then transport the oil to distant markets. American air cover offers some protection along the Omani coast. Tankers frequently switch off their tracking signals during crossings.

Large potential returns help explain why owners accept the risks. Kpler analyst Homayoun Falakshahi estimated that reselling Iraqi crude can generate an additional $20 per barrel compared with before the war, equivalent to approximately $40 million for a supertanker cargo.

Those earnings have attracted older vessels previously used to transport Venezuelan and Russian oil. Sailors, meanwhile, have been offered substantial bonuses, including as much as $25,000 for a round trip lasting one or two weeks, according to earlier Journal reporting.

The financial incentives come amid escalating violence. The Journal counted approximately 30 attacks on ships this month, drawing on reports from the U.K. Maritime Trade Operations Centre and maritime security companies.

Freight for a supertanker transporting Gulf crude to China reached approximately $37.37 per barrel this week, according to Kpler. War-risk insurance has risen to as much as 10% of a vessel's value, compared with less than 3%, Windward analyst Michelle Wiese Bockmann told the newspaper.

The resulting system has sustained exports while leaving buyers exposed to high delivery costs and the possibility of renewed disruption. Iran's own shipments remain constrained by a U.S. maritime blockade, according to the Journal, creating an incentive for Tehran to intensify attacks and regain leverage. Capital Economics economist Hamad Hussain said Iran would need to escalate its actions to recover its earlier influence over regional oil flows.