(Bloomberg) —
The oil-shuttling service that plays a vital role in transporting cargo out of the Strait of Hormuz has resumed activities after a recent slowdown. This service is crucial as tensions in the Middle East increase, allowing millions of barrels to leave the region.
The shuttling service gained importance during the height of the conflict, serving as a lifeline for oil producers. They use ships to carry supplies—often disabling their transponders to avoid detection—out of the Persian Gulf and transfer them to larger vessels beyond the waterway, which then continue to deliver to buyers worldwide. Although the flow of oil through Hormuz is still below pre-war levels, the barrels that have been transported are reducing fears of significant price spikes.
After a decline in shuttling earlier this month due to a ceasefire breaking down and attacks on vessels, the trade has recently accelerated.
According to two anonymous sources familiar with the situation, at least two shipping companies are now moving volumes close to those seen before the conflict escalated, which pushed oil prices up to $100 a barrel last week. Before the interim peace deal in June, estimates suggested that between 4 million and 7 million barrels crossed Hormuz each day.
While the precise amount of oil currently moving through Hormuz remains uncertain, there are signs of increased activity. Buyers of Gulf-origin oil have begun receiving shipments that were delayed, according to several sources who requested anonymity.
Satellite data indicates that more ships are leaving the area. On Thursday, at least seven pairs of ships, four similar in size to supertankers capable of carrying 8 million barrels, were spotted conducting transfers near the Omani port of Sohar, based on images from the European Union's Sentinel-1 satellite. However, these images do not clearly identify the types of vessels, as ships other than tankers can carry out cargo transfers.
This is a significant increase from the only two pairs recorded on July 21, when shuttle activity slowed due to escalating fighting between the US and Iran. Additionally, satellite data revealed multiple transfers earlier this week further north in the Gulf of Oman near Fujairah. Trading data revealed that at least two supertankers emerged from Hormuz after turning off their satellite signals in the Persian Gulf.
Producers have utilized shuttle runs to transport their oil through Hormuz, as many shipowners are hesitant to navigate the risky waterway. Many regional suppliers are using their own vessels or securing fixed contracts for transportation to ensure their oil reaches the market.
The impact of ongoing fighting in the region on shipments remains uncertain. Brent crude futures dipped toward $80 on Tuesday due to signs of de-escalation, but prices spiked again after an Iranian attack on a military base in Jordan, which prompted a US response.
These transits are essential for the global oil market, as before the conflict, Hormuz accounted for about 20% of global oil transport—approximately 20 million barrels daily. However, satellite data suggests oil loadings are still below pre-war levels in some countries.
US Energy Secretary Chris Wright stated Wednesday that the US military continues to provide escort for oil through Hormuz, with approximately 13 million barrels a day leaving the Gulf—split evenly between the strait and alternate pipelines. The US Central Command reported that since early May, it has facilitated the exit of about 500 million barrels from Hormuz, translating to approximately 5.6 million barrels a day during that time frame.
In further evidence that significant flows have resumed, insiders revealed that at least two oil companies have recently received shipments outside Hormuz that were supposed to be collected weeks ago.
These barrels primarily consist of supplies from the United Arab Emirates, purchased through earlier tenders from Abu Dhabi National Oil Co. for offshore crude. Delays resulted in some buyers incurring additional fees for the vessels they hired, which had to wait for the delayed cargoes.
Adnoc's shipping division scheduled a fuel tanker to acquire a cargo from a ship-to-ship transfer near Sohar in the coming days, indicating that shuttle flows are currently active.
“We do not comment on the position, movements, or routing of our vessels as a matter of policy,” stated a spokesperson for Adnoc.
Other countries in the region have also been engaged in shuttling oil out of the Persian Gulf since the conflict began. Some shipments leaving the waterway go directly to buyers after crossing Hormuz, bypassing the shuttle service.
Tracking exact oil flows is complex, especially since ships often operate with their transponders turned off. Yet, following the US-Iran ceasefire in June, there was a moment when 18 million barrels crossed in a single day, as large volumes previously trapped in the Gulf during the outbreak of war were allowed to exit.