Saudi Arabia and the United Arab Emirates are rapidly scaling up oil exports as the Strait of Hormuz reopens under a US-Iran interim ceasefire pact. Bloomberg reported Friday that Saudi Aramco and Abu Dhabi National Oil Co. (ADNOC) have been preparing to restore flows through the critical energy chokepoint, which had been blockaded since late February following US and Israeli strikes on Iran.
The strait, which carries about one-fifth of global oil and LNG shipments, saw its first Saudi tankers transit after the memorandum of understanding took effect this week. Vessel-tracking data recorded 18 strait transits on June 17-18, the highest since the conflict began. Nearly 10 million barrels of oil are now moving through the waterway, with Kuwait also announcing production increases.
Oil prices have retreated from wartime peaks above $95 a barrel, with Brent crude falling to around $80. Still, the benchmark remains about 30% higher for the year, and pre-war levels near $70 are distant. Analysts say a full return to normal shipping volumes could take months due to lingering concerns over mine clearance and insurance.
The UAE, which maintained partial exports via its Fujairah pipeline, is expanding eastern port capacity and aims for "zero Hormuz dependency" regardless of the strait's status. Saudi Arabia similarly relied on its East-West Pipeline to bypass the blockade. Central banks have reacted to the energy shock, with the ECB and Bank of Japan raising rates, though lower oil prices may ease future inflation pressure.
The geopolitical picture remains uncertain. Planned US-Iran nuclear talks in Geneva were cancelled after Vice President JD Vance pulled out, and President Trump has threatened renewed military action if Tehran fails to comply. Despite the upbeat supply signals, the durability of the reopening is not guaranteed.
