The global oil market has avoided a catastrophic price spike despite a three-month naval blockade paralyzing the Strait of Hormuz, as clandestine tanker flows and shifting trade routes mitigate the supply shock. While visible traffic through the critical waterway has plummeted to 15% of pre-war levels, analysts at JPMorgan and Piper Sandler report that millions of barrels continue to reach international markets daily, keeping Brent crude trading near $93 a barrel.
Why have oil prices remained stable during the blockade?
Market stability stems largely from “ghost” shipments and the redirection of crude through alternative infrastructure. According to JPMorgan, clandestine flows—tankers that turn off their transponders to bypass detection—accounted for approximately 2.1 million barrels per day during the latter half of May. These vessels are effectively navigating around the naval blockade, providing a vital buffer for global supply chains.
Beyond clandestine shipping, major exporters are bypassing the Strait of Hormuz entirely. Piper Sandler estimates that roughly 4.5 million barrels per day are now leaving the Persian Gulf via the East-West Pipeline, which transports crude from Saudi oilfields to the Red Sea port of Yanbu. This infrastructure shift, combined with reduced demand from China, has prevented the market from reacting with the volatility many analysts initially feared.
Before the conflict, approximately 15.6 million barrels of oil moved through the Strait of Hormuz each day. Current estimates suggest that even with “ghost” transits, total volume remains significantly lower than pre-war baselines.
How do expert estimates on “ghost” shipments compare?
While industry analysts agree that clandestine activity is occurring, their specific data points reveal how difficult it is to track these shipments. Jan Stuart, a global energy strategist at Piper Sandler, estimates that 2.9 million barrels per day successfully cleared the Strait in May, a figure notably higher than JPMorgan’s 2.1 million barrel estimate.
The discrepancy highlights the murky nature of these “ghost” transits. Stuart’s data suggests that roughly 900,000 barrels are moved by vessels traveling in total darkness—meaning they pay no tolls and avoid all visible identification. Conversely, JPMorgan’s analysis focuses on the broader volume of oil successfully exiting the region despite the naval presence. Both firms agree, however, that these flows are not high enough to fully replace lost commercial traffic.
What happens next to gas prices?
Oil veterans warn that the market is currently underestimating the long-term impact of the crisis as global stockpiles shrink. According to Stuart, the reliance on emergency reserves and clandestine workarounds is a temporary fix, not a permanent solution. He projects that Brent crude could average $130 a barrel by late summer if current trends persist.
If that forecast holds, consumers can expect significant pain at the pump. Gas prices, which currently hover around $4.20 per gallon, could climb above $5.00. This price hike would serve a dual purpose: it would incentivize further emergency oil releases from nations like the United States and force a reduction in global consumption to better match the limited supply.
Frequently Asked Questions
- Is the Strait of Hormuz completely closed? No, but traffic is severely restricted. JPMorgan estimates current commercial traffic is at 15% of pre-war levels.
- What are “clandestine flows”? These are shipments of crude oil carried by tankers that turn off their electronic transponders to avoid tracking and detection while moving through contested waters.
- Why isn’t the oil price higher? Prices are currently tempered by a combination of redirected pipeline exports, lower demand from China, and the use of strategic oil stockpiles.
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