As Hormuz heats up, oil's real risk shifts to the Red Sea

More attacks, and more transits

On 29 September UK Maritime Trade Operations (UKMTO, the British service that issues security alerts to merchant shipping) reported that 3 ships had been hit around the Strait of Hormuz. According to Maritime Executive, they included the 299,319 dwt VLCC Mersin Prosperity and the 115,949 dwt Sinbad. The third was reported to be an LNG carrier, but its name could not be verified.

Windward data showed 17 transits that same day, compared with 16 the day before. Tracking data cited by Baird Maritime had counted only 9 transits on 24 September. So even as attacks continued, visible traffic through the strait roughly doubled within a week.

According to an Al Jazeera analysis on 30 September, the region's exports in September reached 16.328 million barrels a day, the highest since the war began on 28 February. The pre-war baseline was 19.513 million barrels a day, leaving a shortfall of about 3.2 million barrels.

The picture can be read two ways. According to Al Jazeera, the Iranian side says fighting in the strait continues and that it keeps striking small vessels transiting without permission. Windward, however, judges that Iran is less able to restrict traffic in the southern corridor than in midsummer. Under a US blockade, Tehran's own shipments fell to 100,000 barrels a day in September, down from 2.5 million in February.

Why Saudi crude returned to the strait

Kpler data cited by The National show Saudi Arabia's September shipments through Hormuz rising to 2.58 million barrels a day. That is 43% of the oil traffic through the strait. The kingdom has turned back to the strait from the western outlet it built to bypass Hormuz.

The reason is damage on the Red Sea side. A drone attack on 10 September halted the East-West pipeline, and loadings at Yanbu stopped on 11 September. Anadolu Ajansı reported on 30 September that half of the line's export capacity had returned. According to BigGo Finance, the pipeline is carrying 2.0–2.65 million barrels a day against a capacity of 7 million.

At Bab el-Mandeb, the strait linking the Red Sea to the Gulf of Aden, oil flows fell over the same period from 5.45 million to 2.56 million barrels a day. Our previous report looked at the insurance premium at Yanbu. What is visible this time is different: cargoes are avoiding the risk of the route itself, not just its premium.

The backup outlet has weakened

According to Kpler, about 40% of crude now leaves the region without passing through Hormuz, compared with 17% before the war. That seems to suggest dependence on the strait has fallen. But the largest bypass route, the Saudi pipeline to the Red Sea, is running at less than half its capacity.

This is why two measures tell different stories. Kpler puts combined flows through Hormuz, Bab el-Mandeb and Suez at 9.99 million barrels a day in September, 61% below February levels. Al Jazeera, by contrast, puts regional exports including pipelines at about 80% of pre-war levels. The figures cover different routes and cannot be compared directly.

The upshot is that Gulf oil had two outlets, and one of them has weakened. Every new attack in Hormuz now hits a system with less spare capacity.

Piracy returns to the Gulf of Aden

The risk also extends south of Bab el-Mandeb. According to a 30 September Al Jazeera report, Somali pirates killed 5 crew members on the Palau-flagged tanker Honour 25, which they had hijacked on 21 April, before it was rescued. This is seen as the first deadly attack by Somali pirates in more than a decade.

According to AP, the ship had 17 crew on board, and at least 11 pirates escaped. Officials count at least 15 attacks since April; the MT Asana, hijacked in July, is still being held off Galmudug. The 2008–2014 wave cost the global economy billions of dollars.

New investment is also going ahead on the same coast. On 30 September Kenya and Dangote broke ground at Lamu on a refinery that will process 700,000 barrels a day; Dangote promised it would open within 40 months. Crude supplies for the plant will also pass through this increasingly tense stretch of the Indian Ocean.

What the curve prices, and what it misses

According to the Reuters summary on Euronext, Brent's November contract closed at 103.50 $ on its expiry day, 30 September, while the December contract closed at 98.03 $. The 5.47 $ gap, known as backwardation (when near-term delivery costs more than later delivery), shows that physical supply is tight today. Brent ended September up about 14%.

EIA data released on 30 September point the same way: crude inventories rose by 922,000 barrels while distillate stocks fell by 2.3 million barrels. The shortage is being felt more in refined products than in crude.

The curve's downward slope shows the market assumes the squeeze will ease within months. That assumption rests on rising traffic through Hormuz. Yet traffic is rising precisely because the Red Sea outlet has weakened, so the risk is not falling but concentrating in a single strait.

From 1 October headline Brent will look about 5 $ lower because it has rolled to the December contract. The drop reflects a change of contract month, not easing.

What it means for Türkiye

For Türkiye, which buys at Brent-linked prices, the fact that both outlets are risky at once could keep the near-term delivery premium in place for longer. The Red Sea and Suez route is the shortest path to the Mediterranean, so the squeeze at Bab el-Mandeb directly affects cargoes bound for this region.

The 2.3 million barrel drop in distillate stocks shows diesel is the first product to watch. The mechanical 5 dollar fall in the headline price, meanwhile, does not by itself mean a cheaper import bill.

There are three indicators to watch. The first is whether daily transits at Bab el-Mandeb rise above the 26 ships of 24 September. The second is whether the East-West pipeline exceeds 2.65 million barrels a day. The third is how the December contract trades around 98.03 $.