The result is — once again — a dramatic decline in Middle East exports. Combined exports from the Gulf and Saudi Arabia's west coast slipped this week to around 6.2 million barrels per day. That’s less than half the wartime peak of 13.4 million bpd hit in late June and far below the more than 20 million bpd that typically left the region before the conflict, according to data analytics firm Kpler.
But what is perhaps most alarming for energy markets is not this short-term volatility but signs that the complex, opaque trading patterns created by this stop-and-start conflict might be here to stay.
An act of desperation
First, there’s the question of Iran’s control over the Strait of Hormuz.
After months of conflict, Gulf states appear desperate to restore energy exports to replenish depleted state revenues. As a result, many are now willing to contemplate an idea that would have been almost unthinkable only weeks ago: granting Iran a formal role in managing traffic through the critical waterway.
Earlier this week, Oman presented Tehran with a Gulf-backed proposal under which Iran would help administer the strait and collect voluntary fees from vessels using the route.
Iran rejected the proposal, insisting that the entire inbound shipping channel and part of the outbound route should fall under its control, according to an Iranian official.
Washington, for its part, has repeatedly rejected any suggestion that ships should pay tolls or fees to transit the strait.
Yet military realities are steadily narrowing the range of alternatives. U.S. air strikes have so far failed to eliminate Tehran's ability to disrupt shipping while President Donald Trump appears reluctant to embark on a deeper regional war. Under those circumstances, a compromise that gives Iran at least some degree of authority over Hormuz appears increasingly plausible.
An agreement that formalises Iran's influence over the world's most important energy chokepoint would be seen as a big win for Tehran and could carry far-reaching consequences.
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