CNBC reports that the 60-day ceasefire between the United States and Iran ended on August 17, with no official negotiations or a deal in sight. It also reports that shipping traffic through the Strait of Hormuz slowed to a halt over the prior weekend, although that last point is disputed. Only three ships passed through the waterway on August 16, according to data from Kpler, with the five-day average for transits at 12—much lower than the approximately 130 vessels that transited the strait daily before the conflict started on February 28. Reuters reports that five commodity vessels transited the strait on August 15, with none registered for August 16, citing data from Kpler, compared with 31 the prior weekend. Some ships may pass through undetected with transponders off.
At the Bab el-Mandeb strait, where Iran-aligned Houthis declared a naval blockade on Saudi Arabia on July 20, Kpler data showed 49 weekend transits by commodity vessels, down from 55 in the prior week. Kpler tracked no Saudi oil shipments. The Saudis may also be moving oil through the Strait of Hormuz without reporting it. Saudi Arabia, Turkey, and Pakistan signed a defense agreement, deepening ties between three of the world’s largest Islamic powers, that President Trump has called a major step toward greater security and stability in the Middle East. President Trump also recently announced his intention to declare the Strait of Hormuz a U.S. territory, introducing a new position regarding the waterway at the center of the conflict with Iran. The President said it with a laugh, leaving analysts unsure of his intentions.
According to U.S. Secretary of Energy Chris Wright, oil exports from the Middle East have rebounded to 15 million barrels per day and even topped the pre-war average of 20 million barrels per day. He posted that the seven-day average for oil leaving the Strait of Hormuz is currently up to almost 9 million barrels per day. Combined with an additional 5-7 million barrels per day leaving the region via newly upgraded pipelines and export facilities, total oil flows are currently averaging about 15 million barrels per day. Secretary Wright further posted that “In coordination with the U.S. military, the U.S. Department of Energy maintains the best available data related to oil and oil products leaving the Arabian Gulf,” and added that “Many private businesses undercount the number of ships leaving the Strait of Hormuz due to ships moving covertly through the waterway.” The exports currently leaving the Middle East will begin appearing in import data in various countries over the next five to six weeks.
Brent crude oil futures are hovering around $89 a barrel and U.S. West Texas Intermediate crude futures are around $83 a barrel. The national average price of gasoline remains above $4 per gallon this week.
Iran is still in talks with Oman on establishing a route through the Strait of Hormuz. According to Iran, talks with Oman were continuing and taking a long time because of the subject’s complexity, the involvement of multiple actors, and countries seeking to undermine the process.
President Trump plans to hit Iran hard economically, and Treasury Secretary Scott Bessent said that the United States would soon impose measures on Iran that have “never been seen.” Since the Iran war began in February, the United States has levied additional maritime, energy and financial sanctions on Iran and began a naval blockade. The U.S. Treasury Department’s Office of Foreign Assets Control imposed sanctions on more than 1,000 people, vessels and aircraft since President Trump began his second term. Recent measures have targeted Iran’s shadow oil fleet; shipping insurers; entities and people enabling Iran’s acquisition of weapons; and digital exchanges, freezing an estimated $500 billion in Iran-linked cryptocurrency.
The United States could impose other measures including sanctions on Chinese Teapot refineries and Chinese banks as China is the major buyer of Iranian oil; a land blockade that would require the assistance of Iran’s neighboring countries; tariffs on goods from countries that do business with Iran; and sanctions on Iranian individuals and entities, as well as others in China and the Gulf, which are helping Iran evade sanctions to collect revenues for its war effort. Some of China’s refineries have provided large sums of revenue to the Iranian revolutionary government
Global Oil Stocks
In March, the International Energy Agency (IEA) announced the release of 400 million barrels from emergency reserves and last month indicated that the global economy still had substantial stocks, after using 0.3 billion barrels during the Iran conflict. IEA stocks now total 1.5 billion barrels, including government-held and commercial stocks, and are enough to cover the current estimated supply gap of 5 million barrels per day for 300 days. However, the IEA cannot order the release of commercial stocks, such as those held by refiners for operational reasons, leaving 0.9 billion in government-held stocks—enough to cover the supply gap for 180 days. These numbers don’t include China’s reserves, which have been reported at over a billion barrels, giving it a comfortable cushion.
Of the remaining government-held IEA stocks, one-third is located in the United States. In May, the U.S. Government Accountability Office warned that the Strategic Petroleum Reserve’s (SPR) infrastructure was deteriorating fast and that a quarter of reserves (over 100 million barrels) would not be available for release. If the United States has only 200 million barrels of accessible SPR stocks left, it can cover 40 days of the current supply gap. Of course, the United States continues to produce oil at record levels, and so do other non-OPEC countries.
Conclusion
The 60-day ceasefire between the United States and Iran has ended without resolution, and issues over ships transiting the Strait of Hormuz remain. The United States reports many more ships transiting than official data from tracking services show, which could be because of ships crossing without transponders turned on. The agreement between Oman and Iran on a transit method has not been finalized, and in the meantime a defense pact between Saudi Arabia, Turkey, and Pakistan has been signed. The United States plans additional economic sanctions on Iran that could take several forms. The IEA reports that substantial global stocks remain after using 0.3 billion barrels during the conflict.
For media inquiries, please contact press@ierdc.org.
