Strait of Hormuz Oil Flows Drop 20 Million Barrels Daily After US-Iran Conflict

The disruption followed Iranian closure of the strait after US strikes on Iranian energy infrastructure. Primary shipping data from July through September 2026 show tanker traffic through the strait fell to near zero while volumes through the Cape of Good Hope and expanded Saudi pipelines rose sharply. China increased purchases from Russia and West Africa by 1.8 million barrels daily within eight weeks.

Competing interests center on energy security versus sanctions enforcement. The United States maintained maximum-pressure sanctions while Gulf producers expanded output to capture price gains. European buyers accepted higher insurance costs rather than violate US secondary sanctions. Chinese state firms absorbed discounted Iranian crude via ship-to-ship transfers outside the strait.

Supply-chain adaptation relied on existing spare capacity in Saudi Arabia and the UAE plus accelerated floating storage. No new multilateral agreement has emerged; instead, bilateral deals between importers and non-sanctioned producers have reallocated flows. The pattern matches prior disruptions where market participants prioritize volume continuity over political alignment.

Next phase hinges on whether Iranian forces sustain the closure beyond six months and whether Saudi and Russian spare capacity can offset further losses without triggering coordinated release from strategic reserves.