Is the Strait of Hormuz actually open?

I n recent weeks the flow of crude oil from Gulf producers has been about the same level as before the US and Israel launched their war against Iran. Remarkably, Arab states are managing a modest net increase in their production, while the blockade on Iran hammers its economy. You would think that the Trump administration would be shouting this apparent success from the rooftops as it runs towards the US midterm elections. But, this being the Middle East, things aren’t that simple, and there are two problems: success in getting the raw stuff out has not yet eased the shortage of refined products, leading to soaring diesel prices. Meanwhile, the Gulf producers’ methods for getting through Hormuz might end up strengthening Iran’s diplomatic hand rather than weakening it. Most commented 1 Flydubai co-pilot ‘used axe in attempted terrorist attack’ Middle East 734 comments 2 Ukraine braces for deep freeze in Putin’s worst winter blitz yet Russia-Ukraine war 255 comments 3 Free care is already available. But why is it so hard to get? Family Finances 59 comments 4 Sean Dyche: My plasterer mate thinks he knows more about tactics than me Football 42 comments 5 This foundation is the best I’ve used in years Beauty 16 comments During the past week, market analysts have had some lively disputes about exactly how much crude is being exported, not least because producers are cloaking their activities for security reasons. Ana Subasic, a senior analyst at Kpler, one of the biggest market intelligence firms, says crude exports coming out of the Gulf, excluding Iran , are “essentially equal to their pre-war average”. Top stories 1 Exclusive Kim Kardashian: ‘I was single for five years. I needed to heal’ Celebrity 2 Meet the season’s hottest skirt — the ‘Frankenkilt’ Fashion 3 Why this storied Venice hotel is a hard-to-beat literary stay Venice 4 The best luxury gadgets to buy now LUXX 5 The 16 best luxury fragrances for autumn LUXX She adds that “a very recent surge” in late September, something that may be hard to sustain, may even be allowing the Arab producers to sell more oil than before the war. Trump rejects Iran’s peace offer claiming ‘record oil shipments’ Advertisement Some other analyses have gone further. A note by bankers JP Morgan last week claimed that total exports from the region were only missing about 11 per cent of the pre-war figure, even once you take account of Iranian production bottled up by the US blockade. Top stories 1 Six thrilling Costa Rica trips with Times Holidays Promoted content However, shipping and diplomatic sources, speaking on condition of anonymity, caution against any undue optimism. Even if the current high volumes are sustained, it takes weeks for the tankers to reach the refineries, followed by fuel processing and distribution. The immediate issue is still the galloping price of diesel fuel, spurred by a reduction in refining capacity. US soldiers aboard the USS George Washington in the Arabian Sea last month Ed Ou/Reuters Some of that capacity has been taken offline by military action in the Gulf, but Ukraine’s campaign of long-range strikes against Russia’s energy sector is a significant factor too. That’s proving an uncomfortable reality for many European politicians. President Trump says he has told Kyiv to scale back these strikes. Trump ‘tells Zelensky to stop hitting Putin’s oil refineries’ Russia last week extended a ban on diesel exports, with estimates that its shipments have fallen by 40 per cent this year. Although Britain phased out imports of Russian diesel in recent years, it’s still sensitive to global markets and has just increased dependency on the US. Trump, beset by complaints from truckers angry at having to pay $1,000 for a fill of diesel, was threatening an export ban to Europe unless they released their emergency stockpiles of fuel onto the market. On Friday the G7 countries acquiesced, agreeing to release 100 million barrels . Global unease continues, however, as China last week also started to limit its exports. Advertisement There are now renewed efforts to find a diplomatic solution to the Gulf crisis. Gulf states met the Iranians on the margins of last month’s United Nations general assembly in New York, trying to bring the simmering conflict in the region to an end. There are two issues here. The first is that Trump rejected an Iranian offer for a rapid return to June’s memorandum of understanding (MoU) ceasefire deal, reportedly because it doesn’t do enough to constrain the Islamic Republic’s nuclear programme. The second is that the Gulf states themselves disagree about how far to accommodate Iran’s demands, with Qatar more open and the United Arab Emirates taking the toughest line. The Strait of Hormuz Space Frontiers/Archive Photos/Hulton Archive/Getty Images In the meantime, incentivised by record charter rates, shipowners are taking the steps needed to get crude out of the Gulf. According to people closely involved with the trade, this now often involves acknowledging both Iranian and American rules on transits. “Many people are co-ordinating their shipments with the Iranian authorities, because if you don’t, you get hit,” one of them told me. From the Iranian perspective this satisfies an important point of principle, a recognition of their right to regulate Hormuz through its recently created Persian Gulf Strait Authority (PGSA). But even if they have notified those authorities, almost all ships transiting the strait are taking the American protected or southern route, hugging the coast of Oman. Why? Because the owners, said the Gulf shipper, “fear American sanctions”. Advertisement Not all analysts accept that co-operation with the PGSA is so widespread. Subasic from Kpler believes “a substantial part of the current export system is instead based on bypass pipelines, US-supported transit arrangements, and shuttle tankers crossing Hormuz before conducting ship-to-ship transfers”. It must also be noted that Saudi Arabia , the biggest regional producer, has shown great resilience and ingenuity following the attacks on its facilities last month by Iran’s Yemeni and Iraqi militia allies. Iranian action — as last week when it hit five tankers in four days — often appears to be an expression of frustration, be that with the American blockade, those operators who are not co-ordinating with them or the Gulf states’ slowness to reach a deal over the future of Hormuz while the Islamic Republic’s economy remains on the rack. But the damage to vessels is often slight and the numbers going through in recent weeks speak for themselves. Members of Iran’s paramilitary Basij Force taking part in a military drills off the Iranian coast overlooking the Strait of Hormuz last weekend Shutterstock Editorial Much of this is due to the tactical success of the Americans, with the system of surveillance (largely by uncrewed drones) and intervention that they have established, helping to neutralise Iranian forces in the strait. On Friday, The New York Times said it had evidence that “Iran has been launching dozens of drones and missiles … each week … though it has often failed to strike its targets”. Yet strategic questions for the US remain. While Trump may have been feeling he had the Iranians where he wanted them — blockaded, while their Arab neighbours pump more oil — the price of diesel upset that calculation, as well as causing friction with allies as he pushed them towards Friday’s decision to use their reserves. Advertisement In order to find a sustainable answer, some sort of deal with Iran will be needed. Negotiators are trying to bring the US and Iran along on an “MoU plus” to address nuclear issues more fully. Meanwhile the Gulf states aim to find long-term answers to the management of the Strait of Hormuz . While the emirs fume about Iran’s aggression against them, they also acknowledge that they cannot change geography and that they will have to find a modus vivendi. For now, with the midterm elections less than one month away, neither Trump nor the Iranians want to fold. But once those polls are out of the way, the pressure, particularly from the Gulf states and the people who buy their oil, for a meaningful resumption of diplomacy will build.