The Trump administration is currently asserting that oil flows from the Middle East are normalizing, a claim that has ignited considerable debate within the energy sector and geopolitical circles. A recent report by CNN Business details a significant discrepancy between the administration’s assertion and observable shipping traffic, raising serious questions about the veracity of the claim.
Wright, the Department of Energy’s spokesperson, stated that oil exports from the Middle East rose above pre-war levels on Sunday and have been right around normal for a week, a statement that doesn’t appear to be substantiated by actual shipping data. Wright’s assertion is supported by data from Kpler, an oil market data service, which reports that 84 total vessels transited the Strait of Hormuz last week, down from a peak of over 100 a day before the war and significantly below the 9 million barrels per day Wright claims has been traveling through the waterway. This discrepancy is particularly stark when considering JPMorgan’s estimate of 4 million barrels per day of oil leaving the Strait of Hormuz.
The administration’s claim that 5 to 7 million barrels per day are bypassing the Strait via pipelines is accurate, with Saudi Arabia’s East-West pipeline alone rerouting upwards of 5 million barrels of oil per day to the Red Sea. Despite warnings from Iran’s Houthi allies regarding potential Bab-al-Mandeb Strait blockades, ship traffic has been flowing at a close-to-normal clip through that waterway in recent weeks, according to Kpler’s analysis.
However, the number of vessels transiting the Strait of Hormuz remains at 6, with 4 inbound and 2 outbound, as noted by Andy Lipow, president of Lipow Oil Associates. This figure is significantly lower than the 10 outbound vessels reported by Kpler, suggesting a potential discrepancy in data collection and reporting. Furthermore, a significant portion of the ships transiting the Strait are either shadow fleet crossings – meaning they are not displaying their transponders – or carrying sanctioned cargo, according to Windward Intelligence, a shipping data service. This raises concerns about the accuracy of the administration’s assessment.
The Trump administration’s claims to control the Strait of Hormuz, frequently emphasizing military escorts, have been a persistent focus of scrutiny. During the war, the US military has conducted numerous operations in the region, resulting in 64 vessels transiting the Strait, with 17 being shadow fleet crossings and 10 carrying sanctioned cargo. The administration’s claims regarding the volume of oil leaving the Middle East have been bolstered by data from sources like RBC Capital Markets, which suggests that the market has adapted to the collapse of demand for oil and China’s oil stockpiles, but this has been partly driven by the inability to continue the flow of oil through the Strait due to ongoing threats.
The administration’s claims follow a pattern of attempts to shape the oil market narrative, with President Trump repeatedly asserting that the US controls the Strait of Hormuz, a claim that is contradicted by the reality of military activity and sanctions targeting the region. The administration’s assertions have been met with criticism from various sources, with Helima Croft, head of global commodity strategy at RBC Capital Markets, stating that the administration is trying to jawbone oil prices to the downside, as they have been doing for months. It’s also important to note that the market has adapted and prices have remained relatively low considering the historic oil supply shock during the war, due to the collapse of demand for oil and China’s massive oil stockpile withdrawal.
Source: CNN
