Hormuz Disruption Tests Gulf Energy Trust

Pat Breen argues that the Gulf’s biggest long-term energy challenge is no longer simply whether oil and gas can reach global markets, but whether customers will continue to trust the region as a reliable supplier. The Strait of Hormuz has historically carried about 20 per cent of global LNG trade and roughly 20 million barrels of oil a day. Disruption there, including damage at Qatar’s Ras Laffan facility and repeated force majeure declarations, has intensified buyers’ concerns. Those concerns build on existing shifts: European gas demand remains below its pre-Ukraine-war average, while Asian buyers are increasingly considering alternatives to imported gas. The article warns that short-term responses to supply interruptions—such as switching to coal, curtailing industry and restarting nuclear plants—can become lasting changes in energy strategy. This could turn a temporary trust deficit into permanent demand destruction. Breen points to efforts by QatarEnergy, Aluminium Bahrain and Saudi Arabia to find alternative supplies, routes and infrastructure. These measures cannot replace normal flows through Hormuz and are costly, but they demonstrate that producers are trying to maintain supply under pressure. Asia is particularly important because it receives most LNG shipped through Hormuz and will shape future energy demand. Buyers there, as well as in Europe, are seeking affordable contracts, flexibility, clear communication and assurances of replacement cargoes if disruptions recur. Rising insurance costs add to the pressure on contract negotiations. Breen concludes that Gulf producers’ future commercial leadership will depend less on announcing new capacity than on how they treat customers during a crisis. The region’s reputation for dependable supply took decades to establish, but could take much longer to rebuild if lost. Trust, the article argues, is the Gulf’s most valuable export.

Oil shipments through the Strait of Hormuz increased in September as Saudi Arabia redirected crude away from a Red Sea route disrupted by Houthi attacks and a drone strike on its East-West pipeline. Saudi flows through Hormuz reached 2.58 million barrels per day, up from about one million in August and equal to 43 per cent of the strait’s oil traffic, according to preliminary Kpler data. Meanwhile, Bab Al Mandeb flows more than halved month-on-month, falling to 2.56 million bpd. The shift has not restored regional exports. Combined oil flows through Hormuz, Bab Al Mandeb and the Suez Canal were 9.99 million bpd in September, down from 12.17 million in August and 61 per cent below February’s pre-war level. Saudi Arabia accounted for about 3.7 million bpd of September’s total. The kingdom had earlier relied on its five-million-bpd East-West pipeline to transport crude to Yanbu for shipment through Bab Al Mandeb; Houthi threats and attacks, including a deadly missile strike on the cargo ship Tihamah, made that route increasingly risky. A September 10 drone attack halted Yanbu loadings the following day. The pipeline and loadings have since resumed, but remain below pre-attack levels. Flows from other exporters also fell. Excluding Saudi Arabia, traffic through the strait declined 29 per cent to 3.44 million bpd. Kuwait’s shipments more than halved, while those of the UAE and Iraq fell 43 per cent and 23 per cent respectively. Iran moved only 100,000 bpd through Hormuz under a US naval blockade, compared with 2.5 million bpd in February. Diplomatic efforts have not produced a return to normal traffic. Iranian Foreign Minister Abbas Araghchi offered to reopen Hormuz within seven days if Washington lifted its blockade and sanctions. US President Donald Trump rejected the offer, while leaving open the possibility of continued talks. The figures exclude tankers operating with transponders switched off.

Middle East crude exports rose in September to 16.3 million barrels per day, their highest level since the Iran war began seven months earlier, according to preliminary Kpler data. The total remains well below February’s 19.5 million barrels per day. Saudi Arabia drove much of the increase, more than doubling exports from August, while flows through the Strait of Hormuz were projected at about 9.7 million barrels per day. The article notes that regional totals also include oil shipped from ports outside the strait, and that Saudi Arabia has increased shipments from Gulf terminals after attacks damaged its East-West pipeline to the Red Sea. Some Qatar-linked LNG tankers have crossed Hormuz this month, after no visible crossings in August, but normal exports have not resumed. QatarEnergy has extended force majeure notices to some European and Asian customers. Italy’s Edison says six more cargoes will not arrive at its Adriatic LNG terminal, bringing missed deliveries since April to 35; it has replaced 23, mainly with US gas. Customers in Pakistan and Bangladesh have also been told suspensions will continue through November. The disruption followed US-Israeli strikes on Iran on 28 February and subsequent attacks on commercial shipping around the strait. US President Donald Trump rejected an Iranian proposal to reopen Hormuz and end the fighting within seven days, while Qatar continues to mediate. Iranian Parliament Speaker Mohammad Bagher Ghalibaf warned that regional infrastructure would not be safe without guarantees for Iran’s security. Ship-tracking data identified several Qatar-linked LNG vessels that crossed the strait, though the number is uncertain because some ships disable tracking. Qatar exported just 18 LNG cargoes in the first six months of the war, compared with 509 in the same period a year earlier. With no alternative export route, Qatar’s LNG trade depends on Hormuz. Attacks also damaged two production units at Ras Laffan, reducing capacity by about 17%; repairs are expected to take around three years. Qatar’s energy minister said the 12 undamaged units could return to normal operations within weeks if shipping through the strait becomes safe and regular.