Transshipment keeps Middle East crude flowing as 12 cargoes bypass Hormuz

Ship-to-ship transfers off Oman and the UAE are sustaining Middle East crude exports as attacks disrupt Strait of Hormuz transits.

Ship-to-ship transfers off Oman and the UAE are keeping Middle East crude exports alive, with EU satellite data showing 12 cargoes swapped outside the Strait of Hormuz on Monday.

"The transshipment network is absorbing the shock of the blockade, but every transfer adds cost and risk that ultimately lands on freight rates," said SV Anchan, chairman of Safesea Shipping, whose tanker Safesea Vishnu was struck in Iraqi waters.

EU Sentinel 2 imagery captured the 12 transfers across a stretch of more than 100 kilometers (62 miles) off the Omani and Emirati coasts, with some vessels disabling their AIS tracking to move undetected. Traffic through the strait itself has thinned sharply since the United States reimposed its naval blockade on Iran; shipping data showed seven vessels crossing on Wednesday, four empty tankers entering the Gulf and three exiting, with no large crude or liquefied natural gas carriers among them. India's three tankers — Desh Vaibhav, Desh Vibhor and Sanmar Herald — carrying more than 860,000 tonnes of cargo and 94 crew did transit the waterway en route to ports due between June 24 and July 1.

The reliance on ship-to-ship transfers with tracking disabled points to elevated geopolitical risk that could swing oil prices if the situation deteriorates. Mediators led by Qatar report progress toward ending the US-Iran war, and senior US officials express optimism about reopening the strait's shipping lanes soon, but Iran is seeking full control over inbound shipping and visibility over outbound traffic — conditions that would keep the transshipment lifeline in place.

Transshipment hubs absorb the blockade

The pattern has become the market's quiet workaround since the blockade throttled direct transits. Satellite images show tankers gathering off Fujairah and Sohar, the key transfer points, with some vessels now exiting the Gulf of Oman after recent Iranian attacks. Commercial traffic continues through Hormuz but at reduced levels, and operators are delaying some passages while they weigh security.

The cost of that caution is mounting. Insurance premiums for vessels and crews have soared as attacks on commercial shipping spread, and the recruitment of Indian seafarers — who crew a large share of the global fleet — has slowed as hiring costs rise. The Directorate General of Maritime Administration has told Indian seafarers to assess security conditions before taking jobs in conflict zones, following attacks that killed five Indian crew members. India has put its agencies on the highest alert and is coordinating with shipping ministries and regional maritime authorities to support crews caught in the conflict zone.

What a prolonged closure would cost

The stakes for global energy markets are direct. The Strait of Hormuz carries roughly a fifth of the world's oil and about a quarter of its liquefied natural gas, and any sustained closure would force buyers to reroute cargoes around longer, costlier paths. Executives say India could source alternative crude and LNG supplies at higher prices, but LPG imports from the Gulf remain a vulnerability, especially with global inventories already depleted after months of stock drawdowns.

The last time transshipment networks expanded this visibly was during the 2019 tanker attacks, when ship-to-ship transfers off Fujairah briefly became the preferred method for moving Iranian crude under sanctions. That precedent suggests the current pattern could persist even after formal talks resume, because the infrastructure and the commercial incentives are already in place. If the blockade holds and negotiations stall, the transshipment corridor will keep functioning but at a premium — higher freight, insurance and financing costs that ultimately get passed into the price of every barrel that reaches Asian refiners.

This article is for informational purposes only and does not constitute investment advice.