How the US got oil shipments moving and what it would take to bring prices down

Crude oil is moving through the Strait of Hormuz at a pace that is starting to approach prewar levels, a notable rebound for the world’s most critical oil chokepoint.

That restored flow is mainly the result of Iran’s depleted military capability and a U.S. Navy operation that has secured a portion of the waterway for relatively secure passage.

But the forces driving high fuel prices are not receding along with the development. That will require a lot more than the costly military campaign that is clearing the way for passage of one product at one particular moment in the war.

Most of the refined gasoline and diesel that was moving through the strait before the war is still not getting shipped, a major factor keeping prices elevated.

The rebound of crude shipments “is good news, but we are far from out of the woods,” said Bob McNally, founder of the research firm Rapidan Energy Group. “The market realizes that. We have dug ourselves into a deep deficit over the last several months and this only reduces it. It does not get us back to where we were.”

Crude oil prices dipped Tuesday — largely as a response to Saudi Arabia’s East-West pipeline resuming limited operations. The price of Brent crude, the global benchmark for oil, remained above $100 Tuesday night, roughly 40% higher than it was when the Iran war began in February.

Meanwhile, the price of a gallon of regular gas in the U.S. is averaging $4.46, and diesel is at $6.44, according to AAA.

Analysts warn that even sustained deliveries of crude through the Strait of Hormuz at prewar levels would not do much to meaningfully bring down global prices in the coming weeks.

They note that oil inventories are depleted and need to be replenished. Refining infrastructure in the Middle East has been badly damaged and will take time to repair — all the while remaining vulnerable to further attacks.

As a result of that constrained capacity, gasoline and diesel shipments through the strait — crucial to bringing prices down for consumers — remain just a fraction of what they were before the war.

“Nobody consumes crude oil directly,” said Mark Finley, an oil markets scholar at Rice University’s Baker Institute for Public Policy. “It has to be made into something useful, like diesel or jet fuel or gasoline. The world’s refining system that turns crude oil into useful products is severely strained.”

As if to punctuate the point that the emergency is not over and inventories of everything are running low, the U.S. Department of Energy on Tuesday announced it would release another 40 million barrels from the Strategic Petroleum Reserve, which is already at its lowest level since 1983.

“We have dug ourselves into a big hole,” Finley said.

There is general agreement in the oil industry that most of the crude still getting blocked in the Strait of Hormuz is Iranian, and that is by design. The U.S. is trying to put economic pressure on the regime and choke off its funding stream for its military activities.

As far as how much non-Iranian crude is getting through, ship tracking firms offer somewhat different estimates.

According to Kpler, the week ending Sept. 27 averaged nearly 12.5 million barrels per day, just 1 million barrels below the “prewar baseline.”

Windward, another ship tracking platform, estimated closer to 10 million barrels per day.

“This is not trivial,” said Ami Daniel, Windward’s co-founder and CEO. “The U.S. military has done a fantastic job facilitating consistent shipments.”

The amount of oil getting through, though, does continue to swing wildly. There were days in September where only a few million barrels transited the strait, according to ship tracking data.

The restored flows depend on extremely costly U.S. Navy assistance and dark-fleet workarounds that could unravel with a renewed Iranian military campaign.

Markets remain skeptical that the shipments of crude can continue at prewar levels absent a major diplomatic breakthrough between U.S. and Iran.

“Maintaining the American military presence required to keep significant volumes of oil moving through the Strait comes at an enormous financial and operational cost,” Danny Citrinowicz, a Middle East security scholar at the Atlantic Council, posted on X Tuesday.

“The real test is whether Washington can turn its military advantage into a durable situation in which oil flows normally, insurance and transportation costs decline, the extraordinary U.S. military deployment can be reduced, and Iran effectively loses Hormuz as a tool of strategic coercion,” Citrinowicz wrote. “We are not there yet.”

Even full restoration of shipping through the strait, McNally warned, would not bring markets back to where they were at the beginning of the year.

Iran has shifted its attacks away from the strait toward oil infrastructure on land, which in some cases can be even more damaging. One such recent attack disabled Saudi Arabia’s key East-West pipeline, which had been delivering 7 million barrels of crude each day. The pipeline has been only partially restored and analysts say it remains extremely vulnerable to further targeting.

“Iran maybe losing control of Hormuz, but it retains the ability to disable critical infrastructure,” McNally said. “This progress can be quickly offset by the Iranians and their allies hitting those fixed assets.”

• Karen DeYoung contributed to this report.