Gulf Oil Flows Return to Prewar Levels as Iran Warns of Wider War

Persian Gulf crude exports climbed to roughly 19 million barrels per day this week, nearly erasing the war-driven disruption with Iran, according to Goldman Sachs estimates.

JPMorgan pegged the figure lower, at about 17.5 million barrels per day, or 98% of prewar volumes. Kpler, a third tracking firm, said September flows reached at least 16.5 million barrels and called the rebound complete.

How did Gulf oil bypass Hormuz?

Roughly 40% of regional crude now leaves the Gulf without crossing the Strait of Hormuz, up from 17% before the war, Kpler reported Wednesday. Saudi Arabia and the UAE have shifted volumes to pipeline routes, and more than 70% of the crude that did transit Hormuz in August changed tankers offshore.

The rebound came despite a U.S. naval blockade that has held Iran's own exports to essentially zero. President Donald Trump and senior officials claim the U.S. now controls the strait and predict Iran's economy will collapse.

Crude prices remain elevated, and diesel has absorbed an even sharper shock. Shipping and insurance costs have not normalized, as periodic attacks on commercial vessels continue.

What leverage does Iran retain?

Plenty, according to Esfandyar Batmanghelidj, founder and CEO of the Bourse & Bazaar Foundation think tank. Iran's ability to disrupt energy flows extends beyond the strait itself. Tehran can still hit drilling platforms, refineries, and export terminals across the Gulf.

"So while the risk premium around oil flows may seem tolerable for Trump, the threats to energy production infrastructure in the Gulf remain significant, which is exactly why regional countries are still trying to mediate a return to a durable ceasefire and diplomatic agreement," Batmanghelidj posted on X on Monday.

He warned that Iran could escalate if "Trump isn't feeling enough pain to take the diplomatic off-ramps being put in front of him." Trump has rebuffed Tehran's offer of a seven-day ceasefire that would fully reopen the strait in exchange for lifting the blockade and unfreezing Iranian assets.

Trump plans to resume bombing Iran after the U.S. midterm elections, sources told the Wall Street Journal. The Pentagon is reinforcing its regional presence, deploying the USS Theodore Roosevelt aircraft carrier and the USS Makin Island Amphibious Ready Group—three amphibious ships and the 13th Marine Expeditionary Unit—to the Middle East.

Could Iran wage a 'scorched earth' campaign?

"Iran did not wage a scorched earth campaign—but it may yet do so if the current situation persists for too long," Batmanghelidj wrote. "That is what everyone who actually follows this region and its dynamics is worried about."

He argued that Iran retains leverage because the U.S. military can keep oil moving but can no longer guarantee security across the broader Gulf. Iranian strikes on U.S. bases and Gulf cities have underscored what Batmanghelidj called Washington's failure to fully degrade the threat.

Iranian President Masoud Pezeshkian struck a similar tone last week in an interview with Fox News. "We can't even get our own money out of a country to which we've supplied goods, let alone using those funds to pay someone else in another corner of the world," he said, referring to blocked Iranian funds in China.

What happens if the blockade tightens further?

The U.S. tightened sanctions last month, complicating Tehran's ability to move money through front companies and other intermediaries. The Iranian rial has plunged to record lows as oil revenue dries up.

Any Iranian strike on Gulf energy infrastructure would invite U.S. and allied retaliation against Iranian oil fields and refineries—a dynamic both sides appear to be calculating. For now, Trump has chosen to let economic warfare run its course, betting that time and pressure will force Tehran's hand.

But with two carrier strike groups converging on the region and Iran's currency in free fall, the next escalation may not be economic at all.