Oil shipping continues through Strait of Hormuz after US bombs Iran

Oil and LNG tanker transits via the Strait of Hormuz appeared normal midday June 22, according to tanker tracking data, after US air strikes on three key Iranian nuclear facilities escalated Middle East tensions and fueled fears that Iran will follow through on its threats to attack shipping in the key trade chokepoint.

Multiple crude, LNG, and LPG vessels were seen heading to the major Gulf terminals of Ras Tanura and Ras Laffan in Saudi Arabia and Qatar, as well as terminals in Kuwait and Iraq, according to S&P Global Commodities at Sea.

The conflict had already heightened fears of disruptions to oil exports from the Middle East, particularly through the Strait of Hormuz, a vital chokepoint where about 20% of the world's oil and LNG transits daily. However, many experts consider a prolonged Strait of Hormuz disruption less likely due to the US naval presence in the region.

Iran's oil exports of around 1.5 million b/d could be directly impacted by Israeli strikes on its energy infrastructure, potentially removing significant volumes from global markets already dealing with tight supply conditions. Alternative supply routes for Middle Eastern oil and gas are limited, with pipeline capacity insufficient to offset potential maritime disruptions through the Persian Gulf and Red Sea.

"Being pushed in a corner might see a knee-jerk reaction from Iran to try and disrupt the crucial waterway, but a prolonged closure is extremely unlikely and unsustainable," S&P Global Commodity Insights' Global Head, Shipping Analytics & Research, Rahul Kapoor said June 22. "For now, it does seem traffic is normal with extreme caution and heightened watch for the ships underway. Shipping is likely to sustain risk premiums and freight rates to stay elevated until the situation changes."

Uninterrupted so far

Hours before the US launched strikes against Iranian nuclear targets in the early hours of June 22 local time, Yemen-based Houthi rebels also said that if the US gets involved in Israel's fight against Iran, the group will target US ships and US warships in the Red Sea.

Iran has "a variety of options" to respond, Iran's foreign minister Abbas Araghchi said at a June 22 press conference in Istanbul, when asked if any response would include shutting the Strait of Hormuz. Araghchi expects to visit Moscow later in the day to meet with President Vladimir Putin.

According to S&P Global Commodities at Sea, average outbound volumes stood at 14.58 million b/d as of June 18. This is slightly lower than the May level of 14.64 million b/d.

Saudi Arabia's crude exports have rebounded significantly in June, reaching 6.66 million b/d in the month to June 18, according to CAS data. This is a nearly 1 million b/d increase from May, when flows had been lackluster at 5.7 million b/d. In the week ending June 15, average exports hit 7.18 million b/d — the highest weekly level since the second half of October 2023.