World’s Top Crude Trader Isn’t Ruling Out $200 Oil Just Yet

What are ship-to-ship oil transfers, and how do they help cargoes move through the Strait of Hormuz?

Ship-to-ship, or STS, transfers move oil between vessels instead of carrying one cargo through the entire journey on one tanker. Smaller ships collect oil inside the Persian Gulf, cross the Strait of Hormuz, and reload the cargo onto larger tankers in the Gulf of Oman. This helps Gulf producers keep exports moving when passage through the strait is risky.

The arrangement has expanded sharply in recent weeks. The smaller vessels handle the dangerous transit, while larger tankers take over outside the gulf. This allows more crude to leave the region, even though the process is slower and less efficient than normal shipping. Vitol CEO Russell Hardy said these transfers are important for preventing an immediate oil-price spike.

The system is still vulnerable. Attacks, attempted attacks, and harassment can delay vessels or trap cargoes inside the gulf. STS transfers also tie up many tankers for days or weeks, reducing tanker availability elsewhere and driving freight rates higher.

How much oil normally passes through the Strait of Hormuz, and how do recent flows compare with pre-war levels?

Before the war, roughly 20 million barrels per day of oil and petroleum products left the Persian Gulf through the Strait of Hormuz. That makes the waterway a major global energy chokepoint. The article uses this pre-war level as the benchmark for judging whether exports have recovered.

Recent estimates put oil flows through the strait at or above the pre-war level of around 20 million barrels per day. However, Vitol CEO Russell Hardy gave a lower figure for the past seven to 10 days: 14 million barrels per day left the Middle East. That total included 12 million barrels per day of crude and 2 million barrels per day of products.

Hardy said the recent numbers remained significantly below pre-war levels, despite other estimates. The difference reflects varying measurements and time periods. The central concern is maintaining enough movement to prevent more oil from becoming trapped and prices from rising sharply.

Why is continued oil movement through the Strait of Hormuz described as a lifeline for Gulf producers and the global oil market?

Gulf producers depend on the Strait of Hormuz to move oil from the Persian Gulf toward international buyers. Continued traffic therefore supports their exports and revenues. It also supplies the wider oil market with crude and products. If cargoes become trapped, fewer barrels reach refiners and consumers, creating immediate pressure on prices.

The article gives a stark warning from Vitol CEO Russell Hardy. He said that without continued ship-to-ship transfers, oil could reach a $200-per-barrel scenario. He also said there were no more inventories to drain in the West. That means stored supplies could not easily cushion another major interruption.

The lifeline remains fragile. Hardy said 14 million barrels per day recently left the Middle East, but this was still significantly below pre-war levels. Any deterioration around the strait could trap higher volumes, reduce available exports, and trigger another large oil-price increase.

How are attacks and harassment of tankers affecting the safety and reliability of oil shipments in the region?

Attacks and harassment are making tanker movements around the Strait of Hormuz more dangerous and less reliable. When vessels face threats, operators may wait, reroute, seek military protection, or use slower ship-to-ship arrangements. Each response can delay cargoes and reduce the number of barrels moving through the chokepoint.

In the week ending October 5, at least 12 attacks on oil, LNG, and LPG tankers took place around the strait. The US Navy-led Joint Maritime Information Center also reported UAV overflights, targeted surveillance, and occasional radio hailing. It said these actions showed Iran’s intent to maintain pressure on transiting vessels.

The immediate risk is that more ships become delayed or trapped, leaving fewer exports available. The article also links the security deterioration to higher tanker rates and insurance premiums. If conditions worsen, the regional oil lifeline could weaken further, putting additional upward pressure on crude and fuel prices.

Why can ship-to-ship transfers prevent an immediate oil shortage while also creating a shortage of available tankers elsewhere?

Ship-to-ship transfers solve one problem by moving cargoes through the Strait of Hormuz in smaller vessels and reloading them outside the gulf. This helps prevent an immediate shortage of crude reaching global buyers. It is especially important when inventories in the West are already limited and further disruptions could push oil prices sharply higher.

The same process consumes extra shipping capacity. Vitol CEO Russell Hardy called the shuttle operation highly inefficient. Many tankers remain tied up near the gulf, waiting for cargoes for days or weeks. Those vessels are effectively removed from normal service, even though they are technically part of the fleet.

The result is a shipping crisis. Fewer tankers remain available for other routes, while buyers compete for capacity. Average global crude-vessel earnings exceeded $500,000 per day in early October, according to ING. Suezmax and VLCC rates were even higher, showing how supply protection can create transport scarcity.

What happens to oil prices, shipping costs, and diesel prices when tanker capacity becomes scarce and insurance costs rise?

When tanker capacity becomes scarce, buyers and refiners must pay more to secure ships. Riskier routes also bring higher insurance premiums. Those costs are added to the expense of moving each barrel, making delivered oil and refined fuels more expensive. The article says freight rates have reached record levels on key maritime corridors.

The examples are striking. Average global crude-vessel earnings exceeded $500,000 per day in early October, ten times the 2025 average. Shipping crude from Saudi Arabia’s Ras Tanura to Rotterdam cost about $2 per barrel last year, but more than $35 per barrel in September. European refinery margins were also 2.5 times higher than the 2025 average.

ING economist Rico Luman said the combined effect could add more than $0.50 to the base price of a liter of diesel at the pump. Shipping costs are also difficult to calculate, creating daily uncertainty for buyers and refiners. Further security problems could intensify that pressure.

What is the difference between crude oil and refined petroleum products, and why can disruptions affect their supplies and prices differently?

Crude oil is the raw petroleum extracted and shipped to refineries. Refined petroleum products are fuels and other materials made by processing crude, including diesel and products such as LPG. They are different cargo categories, so a shipping disruption can affect their supply, prices, and routes differently. This distinction is based on standard oil-industry usage.

The article gives a clear comparison. Ship-to-ship transfers helped keep crude oil flows from the Middle East at relatively adequate levels. However, fuel shipments collapsed after March and did not recover meaningfully. Crude therefore continued reaching the market through an inefficient workaround, while product supplies remained much weaker.

That split matters because crude availability alone does not guarantee normal fuel supply. Refiners and fuel buyers still face scarce product shipments, high tanker rates, and elevated insurance costs. The article links these pressures to higher global fuel and crude prices, while European refinery margins rose to 2.5 times their 2025 average.