Did Iran lose the Hormuz card? ..Gulf tankers are devising a new way to keep the oil flowing

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Developments in oil shipping traffic in the Gulf during recent months have shown a significant decline in Iran’s ability to actually influence oil flows through the Strait of Hormuz, after the national oil companies in Saudi Arabia, the Emirates, and Kuwait succeeded in developing a new operational model for transporting crude that allowed exports to continue at a pace approaching their normal levels.

Alexander Stahl, an analyst specializing in energy and shipping markets, believes that oil exports in the Middle East have returned to about 94% of their usual levels, despite the security tensions witnessed in the region and attempts to disrupt navigation in the strait, which reflects the ability of Gulf producers to adapt to the increasing risks.

According to Stahel, ADNOC began early in building an operational model to overcome the risks associated with the Strait, by allocating a fleet of giant oil tankers to transport crude from within the Gulf to the Gulf of Oman, where cargo transfers are carried out between ships before returning the tankers to the Gulf to repeat the mission.

Stahel describes this mechanism as the “Hormuz Shuttle,” which has been developed since last May. Both Aramco and Kuwait adopted this model.

With the expansion of operations, the number of tankers operating within this model increased to more than 100 tankers, most of which use a route adjacent to the Omani coasts instead of passing through the lanes closer to the Iranian coasts.

Despite the success of the model, its cost is very high compared to normal shipping conditions.

Stahel estimates the cost of removing oil from the Gulf through this system at about $28 to $30 per barrel, which means that a giant tanker trip carrying two million barrels could generate revenues exceeding $50 million during a trip that takes between 10 and 15 days.

These exceptional revenues explain the significant increase in the value of giant oil tankers currently on the market compared to the cost of building new tankers, as players prefer to benefit from immediate demand rather than wait for the delivery of new ships years later.

The analysis indicates that Saudi Arabia has diverted a large portion of its exports towards Red Sea ports to reduce dependence on the Arabian Gulf. However, the changing situation in the Bab al-Mandab region complicated this path.

This prompted Aramco to gradually return to relying on the port of Ras Tanura and Gulf exports, benefiting from its possession of a huge fleet of tankers affiliated with Bahri, which reduced insurance burdens and risk costs compared to competitors.

According to Stahel, Bahri deployed more than 20 tankers to the region during September, which allowed Saudi Arabia to increase its participation in Shuttle Hormuz operations and enhance its ability to maintain export levels.

The success of the Gulf model did not depend on oil companies alone, as Stahl believes that the US army played a pivotal role in facilitating the passage of tankers through the strait.

Ships wishing to cross coordinate with centers affiliated with the US forces to determine crossing routes and appropriate dates, while US naval and air assets focus on securing the southern corridor close to the Omani coast.

This approach, according to the analysis, allowed transit traffic to be secured without the need for direct escort for each individual tanker, which increased the efficiency of operations and reduced operational risks.

On the other hand, Stahel believes that one of the most prominent recent transformations is the increasing difficulties that Iran faces in exporting its oil.

He attributes this to the limited number of tankers willing to work in Iranian ports amid the high risks and sanctions, which led to a decline in loading activity in some major ports, according to his estimate.

He believes that the paradox has become clear: while the Gulf states have succeeded in devising mechanisms to maintain the flow of oil, Iran itself is facing greater challenges in marketing its production.

For markets, the most important message is that the ability of the Gulf countries to adapt to geopolitical risks appears greater than it was previously, which may limit the impact of any future threats on global energy supplies and reduce fears of a complete halt in exports.