Strait of Hormuz Shipping Falls to a Fifth of Pre-War Levels

Insurance may be unavailable or prohibitively expensive for some transits, while seafarers may be unwilling to accept the risk. ^B That raises the cost of every voyage even when a ship successfully crosses. Owners can respond by delaying departures, avoiding the strait, changing routes or conducting “dark” transits with AIS signals disabled.

A dark transit is not proof that a ship has crossed a particular corridor. It indicates that the visible data is incomplete, which is one reason route-share claims should be treated cautiously.

Have ships shifted from the Omani route to the Iranian route?

The available evidence shows a changing and contested picture rather than a single, stable route shift.

Earlier in August, one Kpler assessment found that seven of eight vessels entering the strait used the Iranian route. ^R A separate tanker-market assessment recorded 45 identifiable transits on the Iranian side and only four confirmed on the Omani lane between July 14 and August 6, although more than half of the observed crossings could not be verified because AIS signals were unavailable. ^T

The more recent picture points in the opposite direction. Kpler reported that more than 80% of liquid-cargo transits during the preceding two weeks either used the Omani, UN-authorised southern channel or went dark and were likely using it. That suggests some operators were seeking to reduce exposure to Iranian control, but it does not establish that every dark transit used the southern route.

There is also a widely circulated claim that 16 of 18 projectile strikes since July 6 occurred along the southern route. ^G Because that figure comes from a lower-confidence source and does not, by itself, establish the circumstances of every attack or the total number of transits on each route, it should not be used to conclude that companies broadly rejected the U.S.-coordinated corridor. The strongest available evidence instead supports a narrower conclusion: operators are making route decisions under severe uncertainty, and the preferred corridor has changed over time.

Neither route can currently be treated as reliably safe. A southern corridor may reduce exposure to Iranian-controlled waters, but escorts and coordination do not remove the risks of missiles, drones, mines, boarding or electronic interference. The commercial choice depends on the perceived balance between those risks, insurance terms, cargo value and the urgency of delivery.

Oil volumes remain well below pre-war flows

Before the conflict, the strait carried roughly one-fifth of global oil and liquefied natural gas exports. ^R Kpler data cited by Reuters put crude and refined-product flows at about 18 million barrels per day before the war, falling to 4.8 million b/d in July.

That is a major reduction, but current barrels-per-day estimates remain difficult to interpret. AIS-dark vessels are harder to track, cargoes may be counted at different points in a voyage, and ship counts do not translate neatly into immediate delivered volumes. Claims that oil exports have returned to normal therefore require cargo-level evidence, not just a small increase in visible crossings.

There was a temporary improvement during the U.S.-Iran memorandum of understanding. Kpler estimated that 374 million barrels exited the Gulf during the 60-day period covered by the agreement—about 6.1 million b/d—but that was still only around 40% of the roughly 15 million barrels that had transited during a comparable pre-war period. The subsequent expiry of the arrangement and renewed attacks show how quickly flows can deteriorate again.

The wider supply impact is already material. The International Energy Agency forecast a 4.3 million b/d, or roughly 4%, decline in global oil supply in 2026 as the broader regional disruption affects Hormuz, Iranian exports, Bab el-Mandeb and other routes. ^R

Saudi Arabia’s bypass reduces—but does not remove—the exposure

Saudi Arabia’s main response has been to move more crude westward through the East-West, or Petroline, pipeline to Red Sea export facilities at Yanbu. The pipeline has been restored to about 7 million b/d of capacity.

Saudi Arabia is also considering an expansion of up to 2 million b/d, potentially creating additional flexibility for Saudi and neighbouring Gulf barrels that would otherwise need to cross Hormuz. Storage and Yanbu loading infrastructure are therefore strategically important: they allow crude to be held, redirected and exported without using the chokepoint.

The bypass is not a complete substitute for Hormuz. Pipeline capacity, storage, port loading capability, tanker availability and downstream refinery requirements can all become bottlenecks. The route mainly helps Saudi Arabia; producers without comparable westbound infrastructure remain much more dependent on Hormuz for exports, imports, condensate, LPG and other energy cargoes.

Why Singapore and other supply chains remain exposed

The disruption reaches beyond crude exporters. Asian refiners and industrial buyers face uncertainty over Gulf crude, refined products, LPG and other feedstocks. Freight, insurance and inventory costs can rise even when some cargoes continue moving, because companies must plan around longer lead times and a less predictable supply route.

Singapore is particularly exposed as a major refining, bunkering, petrochemical and trading hub. The available material supports a conclusion of higher input-cost and supply-risk pressure, but it does not provide a reliable current estimate of Singapore-specific factory losses or plant outages. It is therefore too early to attach a precise manufacturing-damage figure to the disruption.

The central takeaway is more durable: Hormuz does not need to close completely to disrupt global energy markets. When traffic falls from more than 100 crossings a day to single-digit commodity-vessel counts, even partial passage leaves insurers, shipowners, refiners and manufacturers operating with less certainty and fewer practical alternatives.