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Beyond the Chokepoint: How Gulf Producers Are Hedging Against Hormuz

The renewed escalation in the Middle East has again placed the Strait of Hormuz at the centre of the energy and shipping debate, but this time the discussion is moving beyond war-risk premiums and temporary rerouting. Following the latest exchange of attacks, the escalation of tension and President Trump's proposal for a 20% charge on cargoes transiting Hormuz, which eventually was taken back, the market is being forced to price not only the risk of physical disruption, but also the possibility that the world's most important oil chokepoint becomes a more expensive and politically managed corridor. The immediate impact is uncertainty. Owners, charterers and insurers are already operating in an environment where every Gulf fixture carries a wider risk assessment, while the prospect of a formalised transit charge would further increase the cost of lifting cargoes from the region. Even if the strait remains technically open, the market will not treat it as normal until confidence in uninterrupted passage is restored. This means higher risk premiums, more cautious chartering behaviour and potentially stronger tonne-mile support if buyers diversify part of their supply away from Gulf barrels toward Atlantic Basin alternatives.

The more strategic development, however, is what Gulf producers are doing onshore. Saudi Arabia's East-West Pipeline remains the most important bypass, linking the Eastern Province with Yanbu on the Red Sea. Its emergency capability has reportedly reached up to 7 million bpd, but practical export capacity is still constrained by terminal limitations and by the need for Europe-bound cargoes to move through the Sumed system. The UAE is following a similar path, relying on the Habshan-Fujairah pipeline, while accelerating a second line that could materially increase Fujairah export capacity by 2027. This does not remove Hormuz risk, especially as fixed infrastructure remains vulnerable to missiles and drones, but it creates valuable optionality.

The crude-flow data from Fujairah and Yanbu clearly shows that this optionality is already being used. During January-July 2026, combined crude exports from these two ports reached around 1.10 billion barrels, compared with 429.6 million barrels in the same period of 2025, an increase of approximately 156%. The comparison with previous years is even more striking, with 2026 volumes standing about 192% above January-July 2023 and 137% above January-July 2024. The inflection point is particularly visible from March onwards. March 2026 exports reached 156.9 million barrels, more than 150% higher year-on-year, while April climbed to 188.0 million barrels, May to 189.9 million barrels and June to 269.4 million barrels. June alone represented almost 9.0 million barrels per day on average, underlining that the shift is not marginal, but structural in physical flow terms.

The contrast with Iraq, Kuwait and Qatar is important. Kuwait has no meaningful crude bypass, Qatar's LNG remains geographically trapped at Ras Laffan, and Iraq is relying on emergency trucking through Syria toward Baniyas, with volumes that may help at the margin but cannot replace Basra at scale. Iraq's longer-term answer is pipeline capacity toward the north and potentially the Mediterranean, but financing, politics and security remain major barriers.

The conclusion for shipping is that Hormuz is not becoming irrelevant, but it is becoming less trusted. Saudi Arabia and the UAE are investing in redundancy, and this is already redistributing crude loadings toward Yanbu and Fujairah. For tankers, that means a more fragmented Gulf export map: fewer assumptions, more optionality, higher costs and a market where infrastructure risk is now as important as vessel supply.

S&P Activity:

Dry S&P Activity

On the Capesize sector, Chinese buyers acquired the "AASHNA" - 180K/2012 HHIC for region USD 37 mills. On the same sector, the scrubber fitted "NICHOLAS G.S" - 179K/2010 Sungdong was sold for low/mid USD 34 mills to Chinese buyers. Moving down the sizes, on the Post Panamax sector, the "INDUS PROSPERITY" - 93K/2011 Taizhou Sanfu changed hands for USD 11.5 mills to Chinese buyers basis DD due and poor condition. On the Ultramax sector, "BRITA OLDENDORFF" & "BENJAMIN OLDENDORFF" both 62K/2020 Oshima were sold enbloc for USD 37.5 mills each, Meghna acquired the "CMB JORDAENS" - 63K/2019 Tadotsu for USD 35.2 mills, while the "INCE BEYLERBEYI" - 61K/2012 Iwagi was sold to ADNOC for region USD 22 mills. On the Supramax sector, the Electronic M/E "IVS CRIMSON CREEK" - 58K/2014 Shin Kurushima found new owners for mid USD 23 mills Finally, on the Handysize sector, the OHBS "IKAN LANDUK" 37K/2013 Onomichi was sold for very high USD 16 mills and the "BLUE UNION ALPHA" - 28K/2011 Imabari was sold for USD 9.65 mills.

Tanker S&P Activity

This week's tanker S&P activity saw a fair number of transactions. In the Suezmax sector, the sister vessels "ALASKA" - 163K/2006 HHI and "ARCHANGEL" - 163K/2006 HHI were sold enbloc to Chinese buyers for USD 50.75 mills each. Moving down to the MR segment, the 1A ice classed "MINERVA RITA" - 50K/2005 STX changed hands for USD 16.2 mills to Chinese interests. In the smaller sizes, the Stainless Steel unit "FG ROTTERDAM" - 19K/2012 Usuki was reported sold for high USD 22 mills. The Scrubber fitted and StSt "DING HENG 39" - 19K/2008 Fukuoka, achieved USD 18.3 mills basis. Finally, the Stainless Steel "CNC DREAM" - 19K/2004 Fukuoka was concluded at USD 11.5 mills.

Xclusiv Shipbrokers Inc.