Oil transport through the Hormuz Strait may not fully recover to pre-war levels, according to a new forecast. While expectations for reopening the strait have increased following a peace agreement between the U.S. and Iran, major oil-producing countries in the Middle East are likely to continue utilizing alternative routes that they expanded during the conflict.
On June 18, Bloomberg reported that Goldman Sachs analyzed in a report that "70% of the pre-war traffic through the Hormuz Strait could become the new 100%." Before the conflict, approximately 20 million barrels of oil and petroleum products passed through the strait daily.
Goldman Sachs noted that if oil transport through this route increases by about 13 million barrels per day from current levels, exports from Middle Eastern oil producers could approach previous levels. The firm also projected that maritime transport would largely normalize by the end of next month, with production in the region likely to recover by October.
However, even with increased volumes, a return to pre-war transport methods is seen as unlikely. Countries like Saudi Arabia, the United Arab Emirates (UAE), and Iraq have increased their use of alternative routes to avoid the Hormuz Strait during the conflict.
Saudi Arabia's state-owned oil company, Aramco, has expanded its use of inland pipelines to transport oil to the Red Sea coast. The UAE has utilized pipelines leading to the port of Fujairah outside the strait, while Iraq has sent oil to Turkey's Ceyhan port. Goldman Sachs estimates that about 7.5 million barrels are currently being transported daily through the Red Sea port of Yanbu, Fujairah, and Ceyhan.
A shortage of vessels is not expected to be a major obstacle to normalization. Goldman Sachs believes there are approximately 860 million barrels of capacity available in empty tankers that can reach the strait or are within five days' travel. However, some shipowners may still be hesitant to operate on this route, which remains a variable.
Efforts to reduce dependence on the Hormuz Strait are also ongoing. The UAE is expanding its ports along the Gulf of Oman and constructing new ones to enhance alternative export capabilities. Kuwait is discussing ways to export its oil using the pipeline networks of Saudi Arabia and the UAE.
International oil prices have stabilized in response to expectations of reopening the strait. Brent crude futures fell below $78 per barrel on this day, a significant decrease from over $126 per barrel at the end of April due to the war's impact.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.