Key Takeaways
- Gulf countries boosted crude oil and condensate exports in July.
- Exits through the Strait of Hormuz are now slowing as fighting escalates.
- Iran has instructed Yemen’s Houthis to disrupt Red Sea traffic if targeted.
Crude oil and condensate exports from Gulf countries surged in the first half of July, reaching their highest levels since before the Iran war began in late February, according to shipping data. Kpler reported that exports from Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, and Iran increased by about 16% from June’s daily average, hitting a peak of around 12 million barrels per day (bpd).
Despite this rise, shipments through the Strait of Hormuz are now slowing as hostilities intensify. The strait is crucial for global oil supplies, with Vortexa estimating exports during the period at an even higher 13.06 million bpd. The United States and Iran had reached an interim deal in mid-June to reopen the strait and pursue a broader settlement, but disagreements led to its unraveling early in July.
The surge in Gulf exports prompted a decline in oil prices as supply worries eased. However, the situation is now changing with renewed hostilities. Kpler analyst Johannes Rauball noted that 'we’re seeing a slowdown in activity, which means that countries will have to reduce output, which decreases the amount of crude that will be shipped.'
The Strait of Hormuz has already seen reduced traffic, with only three commodity tankers passing through on Thursday – the fewest daily transits since May. This decline is attributed to strikes by both sides, indicating a potential risk to global oil supplies.
Adding to these concerns, Iran has instructed Yemen’s Houthis to be prepared to disrupt traffic through the Red Sea if the United States targets Iranian energy infrastructure. Saudi Arabia has responded by diverting most of its energy exports through its Red Sea port of Yanbu. So far in July, 75% of its 5.29 million bpd crude and condensate have been exported from Yanbu.
The situation remains volatile, with the potential for further disruptions to global oil markets. Analysts are closely monitoring developments as they could significantly impact energy prices and supply chains worldwide.
