Where the cargo loads now

COSCO Shipping Energy Transportation and China Merchants Energy Shipping between them run more than 100 very large crude carriers, each able to lift about 2 million barrels, and before the war those ships brought in roughly half of the crude China bought from the Middle East. Since late July neither company has sent a vessel into the Strait of Hormuz or Bab al-Mandab. In July four COSCO supertankers and one China Merchants ship took their cargo off Fujairah, and about 24 vessels are booked to load near Fujairah and Omani ports between August and mid-September.[1]

The volume of that transfer is visible too: ship-to-ship transfers exceeded 600,000 barrels per day in June and July, against no recorded activity in April and May. Over the same months estimated daily tanker margins on voyages from Oman to China rose to about 110,000 dollars from 30,000 to 40,000 dollars before the war. The detour turned from an obstacle into a price, and that price rewards the tonnage able to perform it. The jump in margins may have other causes; a war-risk premium and tight tonnage push freight up on their own. Even so, its falling in the same months as the rerouting by COSCO and China Merchants shows where the payment lands.[1]

The strait's capacity, the pump's price

Capacity has not come back to the strait itself. Daily transits have fallen from more than 100 before the war to barely above single digits, and few of those are tankers. At least 5 million to 6 million barrels a day have been missing from the global market since the war began, and benchmark crude is back above 90 dollars a barrel. Average gasoline in the US is 4.06 dollars a gallon; a year ago it was 3.14 dollars a gallon. This column wrote earlier that a route was drawn at Hormuz while the transit fee was left unwritten, and that with no fee schedule or administering authority announced the cost of the strait stayed in insurance premiums. That cost no longer sits there: it has moved into freight margins and the pump price.[2], [4]

Against that background the ranking Vice President J.D. Vance set out last week makes sense: the first goal is keeping oil and gas cheap for Americans, the second is that Iran never obtains a nuclear weapon. After Vance spoke, Trump reiterated that the nuclear programme remains the top priority. Kevin Book of ClearView Energy Partners says the priority is sometimes the economic situation, sometimes the nuclear task, sometimes the military task. Once a war's first stated aim comes down to a consumer price, the measure of success comes down to the number of ships passing the strait.[2]

Who fills the missing barrel?

Part of the missing barrel arrives from the Caribbean. On the figure Under Secretary of Energy Kyle Haustveit gave at an industry event in Houston, more than 500,000 barrels a day of Venezuela's roughly 1.25 million barrels a day of output now move to the United States. The crude is heavy and sour, and Gulf Coast refineries are built for exactly that input. In the other direction, more than 100,000 barrels a day of naphtha go back for blending.[3]

The substitution draws a geography: the barrels leaving the Gulf go east through the transfer points off Fujairah and Oman, and the barrels reaching the Gulf Coast come from the Caribbean. How durable that arrangement is can be measured. If daily transits at Hormuz stay in single digits and ship-to-ship transfers off Fujairah and Oman keep running above 600,000 barrels a day, I expect the flow from Venezuela to the Gulf Coast to stay above 500,000 barrels a day through 31 October 2026. The signal to watch is plain: transfer volumes off Fujairah and Oman, and Venezuelan barrels arriving at the Gulf Coast.[1], [2], [3]