The Strait of Hormuz: Oil Smuggling, Shipping Restrictions, and Global Market Impact

The Strait of Hormuz? It’s practically shut down for commercial shipping now, ever since that US-Iran conflict kicked off back in February.
Roughly fifteen oil tankers manage to slip through the narrow Omani coastal corridor daily under American air cover. They turn their GPS transponders off completely just to dodge Iranian detection.
This isn't some secret operation. People with inside knowledge confirmed this practice, the Financial Times got wind of it from four sources who saw these transits happen. And quietly, it’s managed to move millions of barrels onto the market. It helped keep crude prices from jumping past $100 a barrel.
Crews are instructed to stay silent. Lights off. Some crossings even happen in the middle of the night. President Trump confirmed this scale when he spoke to reporters. He said they were taking out millions of barrels, nobody really knows the total count. One night alone? Twenty-two ships went through with no lights.
The strait normally lets around twenty million barrels move daily. That’s about twenty percent of all global seaborne oil trade. Now? Commercial transit is down to maybe two percent of what it was before the crisis. War risk insurance for tankers has shot up eight times the pre-crisis rate. Six major P&I clubs have actually pulled out of covering those routes.
The closure itself means a massive cut. Around twelve million barrels are missing from the market every day. That’s equivalent to losing six supertankers just in transit.
The route itself is rough. It hugs a rocky coastline. It narrows down to barely eight hundred meters at certain spots. Navigating that is seriously difficult for big ships, John Stawpert, who works at the International Chamber of Shipping, admitted they worry about the navigation implications when vessels use it this way. There’s just not much room to maneuver there.
And remember those dark transits? They coincided with the US actively helping ships navigate through that waterway. The US set up this air cover system maybe two weeks ago, according to a few people who know how it all works.
US Energy Secretary Chris Wright said on Tuesday that these crossings had been "meaningfully" rising. He credited this movement for pushing oil prices down by about three percent.
Meanwhile, producers were finding other ways around the block. Iraq, Kuwait, and the UAE have been using their own vessels to ferry crude outside of Hormuz. They avoided those steep fees commanded by the few ships still willing to risk entry into the strait. Energy consultancy estimates put that these three nations collectively moved about three million barrels of crude daily through that route.
You see the effect on stocks too. At Kuwait’s Mina al-Ahmadi terminal, stocks dropped by nearly eight million barrels by the end of May. That suggests loading was accelerating fast. Abu Dhabi National Oil Company sold at least fourteen million barrels in a tender last week alone, with more cargoes set to load this month.
Amrita Sen, who founded Energy Aspects, pointed out that these dark transits meant refineries could lift production. They avoided what she called "summer tightness," theoretically.
Dan Smoot, the head of Vantor the company tracking ships via satellite imaging told the Wall Street Journal CEO summit in London there was a "tremendous amount" of shipping activity happening through the strait that just wasn't making the news right now. Traffic is still way below the 135 ships per day they saw before everything broke out. And those AIS disruptions make tracking even harder, with vessel counts expected to shift as ships reappear beyond high-risk zones.
Written by Gree News Team — Senior Editorial Board
Gree News Team covers international news and global affairs at Gree News. Our collective of senior editors is dedicated to providing independent, accurate, and responsible journalism for a global audience.
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