The Hormuz Strait standoff: how the US-Iran 'test of endurance' is shaping the oil market

The United States and Iran have failed to reach an agreement on reopening the strategically vital Strait of Hormuz in the Persian Gulf, each side locked in a war of attrition to see who blinks first. At the same time, the fact that a substantial volume of oil is still flowing out of the region suggests President Donald Trump has more room to maneuver than it might appear. Last week the US administration pushed back on claims that Iran had nearly sealed off the strait with the threat of missiles and drones.

Since the ceasefire between Washington and Tehran collapsed, shipping data shows fewer vessels passing through the strait openly, while a growing number of tankers are switching off their transponders and moving covertly. Energy Secretary Chris Wright said Tuesday that the average weekly volume of oil leaving the strait had climbed to nearly 9 million barrels a day, crediting the US military and Gulf allies for that. Add another 5 to 7 million barrels flowing through upgraded pipelines and export terminals, and total oil flows come to roughly 15 million barrels a day — compared with about 20 million barrels a day before the conflict began.

Some analysts are skeptical of these figures. Oil market researcher Rory Johnston noted that the average volume leaving Hormuz over the past week came to about 7 million barrels a day, though he cautioned the true figure could be higher given how opaque the "shadow" transits are. Tankers are also slipping through the strait covertly using ship-to-ship transfers — a tactic Iran and Russia have long relied on to dodge Western sanctions: a tanker leaves the Gulf, hands off its cargo to another vessel off the coast of Oman, then passes back through the strait again.

Meanwhile, the US naval blockade is preventing Iran from exporting its own oil through Hormuz, cutting the country off from a crucial source of revenue — while other Gulf oil producers, such as Iraq, keep shipping their crude out via shadow transits and ship-to-ship transfers. Johnston summed up the situation this way: "Most of the crude that isn't Iran's is still getting out. Iran's isn't."

While the global oil market is still grappling with tight supply, the extra crude flowing out of the Gulf is giving it some breathing room — oil prices have eased since last month, when the ceasefire collapsed and the conflict flared up again. That, in turn, buys Trump more time to squeeze Iran's economy through the naval blockade — and some officials in Tehran have already acknowledged that the blockade is driving the country toward economic crisis. Treasury Secretary Scott Bessent signaled that even tougher pressure is coming: "This will be a combination of economic isolation the world has never seen and a sustained blockade of the Strait of Hormuz that ensures nothing goes in or out of Iranian ports."