Hormuz Shuttles Keep Oil Flowing, But At a High Cost
Ship-to-ship transfers off Oman have allowed Gulf producers to keep exporting crude despite the Iran war, with Hormuz exports reaching about 6.5 million bpd in September. The workaround is costly: VLCC freight rates to China have surged above $30 per barrel, and freight now represents over a quarter of the cost. Producers are absorbing part of the increased transportation costs through deeper discounts.
Why it matters: This matters for energy security: the region's oil exports continue only through costly workarounds, making global supply more expensive and fragile.