The ship-to-ship workaround is a meaningful development for the supply side of the oil narrative, since it shows exporters have found a way to keep barrels moving without fully resolving the underlying Hormuz risk, helping explain why crude has stabilised even as attacks on shipping continue. Goldman’s own framing, that the adaptation implies markets are pricing disruptions persisting into 2027 rather than resolving soon, is arguably more important than the near-term flow numbers themselves, since it suggests the current elevated price band may be viewed as a durable new normal rather than a temporary risk premium. That said, refining margins hitting records is the detail worth watching next: if the bottleneck has genuinely shifted downstream to refining capacity rather than crude availability, that has different implications for retail fuel prices and inflation than a straightforward crude supply story would.
Middle East producers are quietly out-manoeuvring Iran’s Hormuz threats, and the workaround, not a resolution, is what’s keeping oil markets stable.
Summary:
- Ship-to-ship transfers, where shuttle tankers from Gulf state oil companies carry crude across the riskiest stretch of the Strait of Hormuz before handing it off to waiting buyer vessels in the Gulf of Oman, have picked up pace in recent days.
- Kpler has begun incorporating these transfers into its flow estimates, lifting its unconfirmed estimate of Persian Gulf oil flows to as much as 15 million barrels a day in mid-August.
- Goldman Sachs, using a blended methodology, estimates Gulf exports of oil and products at roughly 15 to 16 million barrels a day, about 7 to 8 million barrels a day below pre-war levels but 5 to 6 million above the March trough.
- Goldman analysts said the adaptation by shippers signals markets are pricing in disruptions continuing well into 2027, alongside continued “dark” transits where vessels switch off tracking signals to evade detection.
- US Energy Secretary Chris Wright said the US military helped move over 15 million barrels of oil and products out of the strait, with total regional exports, including pipelines, closer to 20 million barrels, and a seven-day average strait flow above 8 million barrels a day.
- Fighting flared around the Strait of Hormuz over the weekend, pushing WTI and Brent futures up nearly 3% on Monday despite a Venezuela oil supply deal announced late Friday; Brent gained about 3% for the month and WTI about 1.4%, while refining margins have climbed to records as the supply bottleneck shifts downstream.
Middle East oil producers are finding increasingly creative ways to push crude to market despite Iran’s continued threats and attacks in the Strait of Hormuz, with ship-to-ship transfers emerging as a key workaround that has helped stabilise crude futures even as the underlying conflict shows no sign of resolution, according to a Dow Jones Market Watch report.
The mechanism works as a kind of relay. Shuttle tankers belonging to Middle East state-controlled oil companies carry crude from the Persian Gulf across the riskiest stretch of the strait and into the Gulf of Oman, a burden state oil companies are now more willing to shoulder. From there, tankers representing buyers, many of them Asian refiners still wary of transiting the strait directly, take on the cargo through ship-to-ship transfers before sailing on to their destinations, paying a premium for the privilege. Commodity analytics firm Kpler has begun folding these transfers into its flow estimates, lifting its unconfirmed reading of Persian Gulf oil flows to as much as 15 million barrels a day in mid-August. Goldman Sachs, blending Kpler’s data with other sources and its own calculations, arrived at a slightly higher estimate of roughly 15 to 16 million barrels a day for oil and products combined, a figure still some 7 to 8 million barrels a day short of pre-war levels but 5 to 6 million barrels above the trough reached in March.
Goldman analysts framed the adaptation as evidence that shippers and producers are now pricing in disruptions persisting well into 2027, rather than betting on a near-term resolution. Alongside the ship-to-ship transfers, so-called dark transits, where vessels switch off their tracking signals to move through the strait undetected, continue to complicate efforts to measure real flows, with satellite imagery that could otherwise verify volumes often delayed or unavailable. US Energy Secretary Chris Wright said American naval support had helped move over 15 million barrels of oil and products out of the strait, putting total regional exports, combined with pipeline flows, closer to 20 million barrels, with a seven-day average of more than 8 million barrels a day leaving the strait itself. Unnamed US officials have separately told Axios that Iran has lost much of its control over the waterway, with the US military effectively controlling most of it.
Despite the improving flow picture, fighting flared around the strait over the weekend, pushing both WTI and Brent futures up nearly 3% in Monday’s session, even as a Venezuelan oil supply deal announced late Friday offered some offsetting relief. For the month, Brent gained roughly 3% and WTI around 1.4%, with Brent’s larger move reflecting its typically sharper sensitivity to geopolitical developments. Markets have leaned on a combination of demand destruction, particularly among Asian buyers that were previously the top importers of Middle Eastern crude and products, and alternative sourcing from countries including the United States, to manage without full Hormuz flows. Analysts say the more serious bottleneck has now shifted downstream to refining, where margins for producing fuels such as gasoline, heating oil and diesel have climbed to record levels in recent weeks. The administration is also counting on its Venezuela deal to ease pressure at the pump, with US oil executives due back at the White House on Tuesday to meet President Trump on reducing gasoline prices.
This article was written by Eamonn Sheridan at investinglive.com.