Kuwait and Qatar ramp up oil shipments through Hormuz

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Uwait and Qatar oil flows rise

Highlights

Kuwait and Qatar restore about 70% of prewar flows.
Hormuz oil shipments have roughly doubled since mid-July.
Rising Gulf exports are reducing the crude risk premium.

The two countries have restored shipments to about 70% of their prewar levels after previously exporting a combined 2 million barrels a day, according to Bloomberg. The recovery comes as the United Arab Emirates and Saudi Arabia also move larger volumes through or around Hormuz, often relying on carefully managed tanker movements and ship-to-ship transfers in the Gulf of Oman.

Gulf producers rebuild export flows

Kuwait and Qatar began using shuttle operations around June and have gradually increased volumes. The strategy involves tankers willing to make the risky passage through Hormuz transferring crude to other vessels outside the strait, reducing the number of ships directly exposed to the most dangerous part of the route.

Kuwait has relied heavily on its own fleet, which includes 11 very large crude carriers. Several have operated without transmitting regular satellite signals for extended periods, making the true scale of shipments harder for commercial tracking services to measure.

Qatar has relied more on commercial carriers. QatarEnergy has also offered crude cargoes using ship-to-ship transfers in the Gulf of Oman, allowing buyers to receive oil outside the most sensitive part of the shipping route.

The system is not without risk. A Kuwait Petroleum Corp. supertanker was struck while crossing Hormuz earlier in August, highlighting the security threat that continues to discourage many commercial vessels.

More barrels reach global markets

Traders estimate that roughly 7 million to 8 million barrels a day are now exiting through Hormuz, compared with about 4 million barrels a day in mid-July. That would put flows at roughly three-quarters of their prewar level. Separate estimates remain higher: Vortexa recently put the seven-day average close to 10 million barrels a day.

The disparity reflects how difficult the trade has become to monitor. Some tankers switch off their transponders, while ship-to-ship transfers and unconventional routing complicate estimates. Commercial tracking firms have consequently produced significantly different assessments of the recovery.

For Kuwait, improved access has also allowed additional crude to return to the spot market beyond barrels committed to long-term Asian customers. That matters because incremental spot supply can influence prices more quickly than contracted volumes.

Supply recovery takes heat out of oil

The expanding flows are weakening one of the main arguments for maintaining a large geopolitical premium in crude. More barrels reaching buyers reduce the probability of an immediate physical shortage, even though Hormuz remains dangerous and traffic has not fully normalized.

Oil prices reflected that shift Thursday. According to the latest market data, Brent crude fell 1.06% to $85.77 a barrel, while WTI declined 1.09% to $81.01 a barrel. The declines are consistent with traders pricing in improving Gulf supply, alongside progress toward arrangements for Hormuz shipping. Crude has already retreated sharply from the levels reached during the most acute phase of the conflict, although continuing security risks prevent the geopolitical premium from disappearing entirely.

We also reported U.S. targets foreign partners keeping Iran trade alive.

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