September brought renewed attacks on shipping and oil infrastructure, but export volumes recovered as diplomatic efforts continued to restore passage through the Strait.

The vulnerability of the region’s energy routes remained clear throughout September. Renewed attacks on merchant ships across the Gulf were followed by drone strikes that temporarily shut Saudi Arabia’s East-West pipeline, halting crude exports from Yanbu on the Red Sea. The pipeline provided an important alternative to Hormuz, making its disruption a further setback for buyers seeking reliable access to Gulf oil. Operations resumed later in the month, although throughput remains below pre-attack levels.

Despite these disruptions, oil exports continued to recover. Kpler data reported by Reuters put September crude exports from the main Middle East producers at approximately 16.3 million barrels per day, compared with 19.5 million before the conflict. However, much of this recovery still depends on restricted passage through Hormuz, transfers at sea and alternative export routes. More oil is reaching buyers, but the shipping system remains less efficient and requires more vessels to move each cargo.

Diplomatic efforts intensified around the UN General Assembly in New York, with discussions focused on a phased reopening of Hormuz alongside an end to the US blockade of ships entering or leaving Iranian ports. Qatar continued mediating between Washington and Tehran through the final days of September, although disagreement over the sequence of steps prevented a breakthrough. A negotiated reopening remains possible, but restoring reliable passage would also require confidence in vessel safety and workable insurance arrangements.

For our core shipping segments, the key question is how an eventual reopening would affect demand. Shorter voyages and fewer transfers could ease tanker and LPG rates from their exceptional levels. At the same time, restored Gulf exports would bring additional cargoes to market and allow depleted energy inventories to be rebuilt. We therefore remain positive on the medium-term outlook for both sectors, while expecting volatility as trade flows adjust.

Sources: Clarksons & Reuters