Key takeaways: Crude oil exports through the Strait of Hormuz have recovered somewhat, but this recovery depends entirely on large-scale U.S. military commitment, while tanker crews are paying a heavy price in lives. At the same time, Iran is intensifying its attacks on tankers. If no negotiated agreement is reached or Tehran does not compromise, this export rebound may prove unsustainable.

Iran is stepping up attacks on tankers transiting the Strait of Hormuz, and the fragile rebound in Persian Gulf crude oil exports is now under threat. According to data from the U.S.-aligned multinational military body — the Joint Maritime Information Center (JMIC), which provides commercial vessel security briefings — nearly 20 commercial vessels, the vast majority of them tankers, have been attacked over the past month while navigating the Strait of Hormuz, the Persian Gulf, and waters off the coast of Oman.

Michal Wiecek-Borkmann, a senior maritime intelligence analyst at Windward, a vessel tracking service provider for defense ministries and governments, said that in the third quarter, approximately 2 out of every 100 vessels transiting the strait were attacked by Iran. Oil transportation through the Strait of Hormuz now relies heavily on large-scale U.S. military deployments to protect tankers traveling along the southern route off the coast of Oman. The security situation in the Strait of Hormuz remains perilous, and if no negotiated settlement is reached or Tehran refuses to compromise, it is unclear how long the current crude export rebound can be sustained.

Shuttle transfer model: In many cases, tankers first carry crude oil out through the Strait of Hormuz, then transfer the crude via ship-to-ship operations in the Gulf of Oman to other vessels, which then transport it to Asia. This shuttle transfer system reduces the risk of Iranian attacks, but it also requires more vessels to complete the oil transportation. Bob McNally, president of Rapidan Energy and a former energy advisor in the George W. Bush administration, speaking about U.S. military commitment in the Gulf, ship-to-ship transfers, and surging tanker freight rates, said: "No one in Washington believes this model is financially sustainable over the long term." McNally said: "Moving commodities, including oil, out of Hormuz this way is highly inefficient."

According to data from Kpler, a tanker and global trade flow tracking agency, daily crude oil shipments through the Strait of Hormuz fluctuate sharply, at times approaching pre-Iran-war levels, while at other times exports fall below pre-conflict levels. A media briefing released by Kpler on Monday showed that in the week ending last Saturday, average crude oil shipments through the strait were approximately 10.3 million barrels per day, about 23% below the pre-war baseline of 13.5 million barrels per day. Windward estimated the average crude oil flow through the Strait of Hormuz at 9-10 million barrels per day, compared with a pre-war baseline of 14.5 million barrels per day.

Analysts said that although crude flows remain volatile, they have recovered somewhat compared with the early days of the war, due to the U.S. military successfully opening a shipping corridor along the coast of Oman.

High costs: But Borkmann noted that shipping companies are moving crude oil out of the Strait of Hormuz at a tremendous cost in terms of crew safety, high freight rates, and insurance premiums. Incident records from the International Maritime Organization, a United Nations agency, show that since July, at least 9 crew members have died, 18 have been injured, and 3 are missing. Borkmann said: "The crude is getting out, but it is being achieved in an environment of extremely high maritime risk." As the security environment deteriorates, the daily shipping cost for tankers carrying oil from the Persian Gulf to China has surged to $1 million per vessel.

Richard Meade, editor-in-chief of Lloyd's List, a leading London maritime industry publication, said in a briefing last Thursday: "Oil flows have recovered because market participants have accepted higher operational complexity and significantly elevated costs." But Meade said the threat of tanker attacks has not been eliminated. Even as more crude flows out of the Strait of Hormuz, the international benchmark Brent oil price remains near $100 per barrel. McNally of Rapidan Energy said: "If the market believed the current situation could persist, oil prices should have fallen noticeably." Prices remain high because "the cost of delivering, insuring, and transporting crude to consuming nations — where benchmark prices are formed — remains elevated."

McNally also noted that although more oil is being shipped out, freedom of navigation in the Strait of Hormuz has not been restored, and Tehran still claims control over the strait. Incident reports from the U.K. Maritime Trade Operations organization show that Iran's Revolutionary Guard on Monday intercepted a tanker transiting the strait, ordering it to change course or face attack, and the tanker ultimately complied. Meade commented: "The oil market has not become safer; it has simply learned to barely keep operating in a persistently turbulent environment."