Iran's ability to choke off Hormuz oil breaks down

Iran’s offshore oil stockpiles could run out by mid-October

Iran’s ability to choke off oil flowing through the Strait of Hormuz — and to use that as leverage in talks with the U.S. — is breaking down, raising the risk that Tehran will resort to military escalation to bolster its position, The Wall Street Journal reported.

The erosion of Iran’s position comes as the U.S. Navy and Gulf oil producers have become more effective at fending off or evading Iranian attacks, allowing more tankers to cross the strait. Middle Eastern crude exports rebounded this month to roughly their highest level since the war began in February, oil data trackers told the Journal. Shipments via Hormuz and bypass routes were delivering just under 80% of their prewar regional flows as of last week, according to tracker Kpler.

So far in September, crude exports from Saudi Arabia, Iraq, the United Arab Emirates and other major Middle Eastern producers — moving through Hormuz and alternative routes — have risen to almost 13 million barrels a day, the highest total since February, when the region exported nearly 19 million barrels a day, according to ship tracker Huax.

Gulf producers are also working around the strait. Saudi Arabia has begun pumping crude through its damaged East-West pipeline and loading tankers in the Red Sea, though officials familiar with the operations said volumes remain reduced and that some current output will go to domestic refineries. Earlier bypass routes included Saudi shipments diverted across the desert to the Red Sea and Emirati crude moved through a pipeline to the port of Fujairah on the Gulf of Oman. Gulf exporters often rely on an elaborate system of loading crude at terminals inside the strait, shuttling it through Hormuz, then transferring it to other ships off the coast of Oman for distribution to global markets.

Iran, by contrast, has been unable to move crude through Hormuz since the U.S. reinstated its maritime blockade in July. The oil that Iran had stockpiled beyond the blockade could run out by mid-October, Kpler estimates, choking off a vital source of revenue as the country’s economy buckles under sanctions and the strain of war.

Iranian crude already loaded on vessels outside the blockade — which is still generating revenue for Tehran — has fallen to around 15 million barrels from 29 million barrels in early September. Kpler expects those barrels, most of which are destined for China, to be depleted by early to mid-October at the current pace. “Probably within the next two weeks…they are going to make their final deliveries of oil to China, and then they will have nothing,” Treasury Secretary Scott Bessent said Sunday on Fox News.

Iran has no comparable way around the strait. Its newly loaded crude remains trapped behind the American blockade at the mouth of the Gulf. Analysts estimate trucks could carry no more than 40,000 barrels daily — a sliver of prewar exports of nearly 2 million.

After the U.S. and Israel launched the war in February, Iran’s attacks on the strait severely disrupted shipping and forced Gulf producers to look for workarounds. Oil prices rose and with them the cost of gasoline and diesel for American consumers. Iran used that leverage to cut a deal with President Trump in June that promised upfront financial relief for reopening the waterway; that deal fell apart when Iran resumed attacks on commercial ships in the strait. The U.S. reinstated its blockade of Iranian ports in July while stepping up efforts to help other countries’ ships through the waterway.

On Friday, Trump rejected a new Iranian ceasefire proposal that would have opened the Strait of Hormuz and ended the U.S. blockade of Iranian ports for seven days to give space for negotiations. Iranian Supreme Leader Ayatollah Mojtaba Khamenei, who has not appeared publicly since succeeding his slain father, referred to “the defenders of the Strait of Hormuz” in a statement issued in his name Monday — rhetoric the paper said underscored Tehran’s view of the waterway as a continuing source of leverage.

The Islamic Revolutionary Guard Corps, which protects Iran’s government and is active in the Strait of Hormuz, has changed tactics rapidly and could increase attacks on ports, refineries and pipelines, regional officials told the Journal. The IRGC also coordinates a network of regional militias. Iran has already expanded the fight to the Red Sea through its Houthi allies in Yemen, who have attacked Saudi shipping and facilities.

Gulf oil producers fear their energy infrastructure could be exposed to new attacks. Drone strikes earlier this month from Iraq forced the shutdown of Saudi Arabia’s East-West pipeline, and Houthi threats have made Red Sea shipping more hazardous, pushing Aramco to redirect more oil back toward Hormuz. Gulf officials told the Journal that the workarounds are balky and expensive — only temporary arrangements, not sustainable over the long term.

Analysts said the erosion of Iran’s position creates a dangerous incentive for escalation. “It shows the diminishing returns of Iran’s Hormuz approach,” said Sanam Vakil, director of the Middle East program at the London think tank Chatham House. “That could lead to a more explosive dynamic where they will have to provoke or press the go button on a larger conflict themselves in order to get out of this bind.” “If Iran’s leadership feels its control over Hormuz is weakening, that does increase the risk they will look for other ways to escalate the conflict,” said Richard Bronze, co-founder and head of geopolitics at Energy Aspects. Hamad Hussain, a senior economist at Capital Economics, warned that “In the absence of a decisive end to the conflict, the balance of risks to oil prices will remain skewed to the upside.”

For now, Iranian attacks on ships in Hormuz appear to have eased. The U.K. Maritime Trade Operations agency, which is affiliated with the Royal Navy, reported Sunday that no confirmed attacks or disruptions had occurred in Hormuz during the preceding 72 hours, although the threat remained severe. The latest attack in the strait listed by UKMTO was on September 23, despite recent Iranian media claims of continued assaults. Analysts told the Journal the pause could have been a way to test Trump’s appetite for a deal during last week’s United Nations General Assembly, but might be temporary.

The stakes in any escalation extend beyond the region. The global economy remains vulnerable to renewed disruption of Middle Eastern energy flows. While the rebound in exports eased pressure on oil prices, successful hits on Gulf infrastructure could quickly send prices higher, with consequences for American consumers already feeling the war’s effect on fuel costs.