Chokepoint Crisis: a closure of the Strait of Hormuz would disrupt tanker markets

An update on what the latest Middle East tensions mean for tankers that originally appeared in the BRS Weekly Tanker Newsletter (7 October) was featured in TradeWinds: https://www.tradewindsnews.com/tankers/no-way-out-hormuz-closure-would-rock-tanker-markets-says-brs/2-1-1721116 Summary: With Iran’s missile attack on Israel, tensions in the Middle East reached a fever pitch. However, oil prices have seen a relatively muted impact due to persistent concerns over global oil oversupply next year, and lack of physical supply disruption. In relation to tankers, BRS assessed that the biggest threat to the industry would be the retaliatory closure of the Strait of Hormuz, of which Iran is a major basin country, and through which 21 mb/d of crude and refined products flow each day.

Given the heavy reliance on this route, Middle Eastern producers have consciously expanded alternative crude export infrastructure in recent years, such as the 5 mb/d Saudi Aramco pipeline from Abqaiq to Yanbu and the 1.5 mb/d Abu Dhabi Crude Oil Pipeline that connects the UAE’s Arabian Gulf and Sea of Oman coasts. However, there is no alternative for the roughly 4 mb/d of refined products transiting via Hormuz to both the Atlantic and Asia.

A consequence of these heightened tensions are the increasingly sophisticated and indiscriminate attacks by the Houthis. This would cause a very slight increase in tonne-miles if the few ships still willing to take the Bab-el-Mandeb risk become deterred. The situation continues to evolve as the world waits on Israel’s retaliation.

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