Gulf Oil Exports Recover to 16.5 Million Barrels Daily, Gas Averages $4.36

Gulf crude exports have largely recovered, but the cost of finished fuel has not. At least 16.5 million barrels per day left the region in September, according to Kpler, while AAA put the average U.S. gasoline price at $4.36 per gallon up from $3.12 one year earlier. Diesel remained at $6.28 per gallon after reaching a record $6.53 in September.

The apparent contradiction reflects how the petroleum supply chain works. Crude-export volume measures how much raw oil leaves producing countries. Gasoline and diesel prices also incorporate the cost and availability of ships, insurance, refining capacity, product transport and distribution. Restoring one stage does not automatically restore the entire system.

Route substitution has been central to the export recovery. Kpler said 40% of Gulf exports now bypass the Strait of Hormuz, compared with 17% before the conflict. Saudi Arabia and the United Arab Emirates have land-based routes that can move some oil around the chokepoint, while greater pipeline use and changed shipping arrangements have supported the broader recovery.

That distinction matters because regional Gulf exports and direct Hormuz traffic are not interchangeable measurements. Before the disruption, approximately 20 million barrels per day passed through Hormuz, equivalent to roughly one-quarter of global oil supply. Kpler’s September estimate of at least 16.5 million barrels per day covers oil leaving the Gulf region and matches the prewar regional average only when Iranian exports are excluded.

More recent Kpler data cited in a review of Strait of Hormuz energy flows put crude moving directly through the strait at a seven-day average of 13.5 million barrels per day, comparable with the stated prewar baseline for that particular series. Meanwhile, combined crude and refined-product shipments through Hormuz averaged 14.2 million barrels per day, about 80% of a roughly 17-million-barrel prewar baseline. Different geographic boundaries, products and averaging periods therefore produce different but not necessarily contradictory recovery figures.

Crude recovery masks a refined-fuel constraint

The most consequential gap is between raw crude and finished products. Refined products shipped through Hormuz were running at a seven-day average of 677,000 barrels per day, according to Kpler data, compared with 3.6 million barrels per day before the disruption. That shortfall helps explain why ample crude movement can coexist with expensive gasoline and especially diesel.

Refineries are not simple storage and transfer points. They must convert particular crude grades into a planned mix of gasoline, diesel, jet fuel and other products while operating within equipment, maintenance and feedstock constraints. Harvard economist Willy C. Shih assessed refining capacity, rather than the volume of crude leaving the Gulf, as an important current bottleneck. In systems terms, additional upstream flow has limited consumer benefit when the downstream conversion stage cannot supply finished fuels at the earlier rate.

Transport costs add another layer. Gulf Oil adviser Tom Kloza said insurance and normal freight expenses had risen sharply, increasing the cost of moving each barrel even as physical flow improved. Marine insurance conditions illustrate why. The International Union of Marine Insurance estimated approximately $2 billion in losses associated with covering shipping risks during the crisis, according to S&P Global’s interview with the group. Higher premiums and freight charges become part of the delivered cost paid by refiners and fuel distributors.

The recovery is therefore real but narrower than a return to normal. Gulf producers and shippers have restored substantial crude-export capacity by using pipelines, alternative routes and revised maritime arrangements. Yet the network now moves oil through a more expensive configuration, while refined-product supply remains well below its earlier level. Until those downstream constraints ease, recovering crude volume alone is unlikely to return gasoline and diesel to their previous prices.

By Thomas Caldwell — AMI’s senior editor for mechanical and mobility engineering, covering vehicle electronics, systems integration, electrification, chassis systems, propulsion, and safety policy.