• White House economic adviser Kevin Hassett declared the U.S. Navy has effectively reopened the Strait of Hormuz for crude oil shipments, citing a sharp recovery in tanker traffic.
  • Shipping data shows crude flows have returned to near prewar levels, but refined products, LNG, and maritime security remain severely constrained.
  • The fragile recovery hinges on continued U.S. military escorts, pipeline bypasses, and ship-to-ship transfers, leaving energy markets vulnerable to renewed disruption.

A Partial Reopening

White House economic adviser Kevin Hassett said the U.S. Navy has opened the Strait of Hormuz to crude oil traffic, pointing to a substantial rebound in tanker movements. According to Kpler data cited by CNBC, the seven-day average of crude transiting the strait reached 13.5 million barrels per day as of September 28—roughly its prewar baseline. Broader Middle East crude exports, including Persian Gulf and Red Sea routes, climbed to 19.5 million b/d, above the roughly 17 million b/d prewar level.

The recovery has been driven by a combination of U.S. military escorts, protected tanker-shuttle operations, ship-to-ship transfers off the UAE and Oman, and increased use of Saudi and UAE pipelines that bypass the strait. Around 40% of Gulf crude is now bypassing Hormuz through pipelines, up from 17% before the conflict, according to people familiar with the matter.

But the strait is not “open” in any normal commercial sense. Iran continues to threaten and occasionally attack tankers, and current flows rely on costly military protection and improvised logistics. U.S. Central Command said its forces have helped protect more than 2,000 commercial vessel transits and facilitate the movement of over 1 billion barrels of crude during the preceding months.

Refined Products Tell a Different Story

The crude recovery has eased fears of an outright physical shortage, but the sharpest strain remains in refined products. Only 677,000 b/d of refined products crossed Hormuz in the cited seven-day period, compared with 3.6 million b/d before the war. The International Energy Agency (IEA) reports that nearly 3 million b/d of regional refining capacity has been shut because of attacks and limited export outlets.

High diesel costs feed into freight, farming, industrial production, construction, and consumer prices, making the disruption economically consequential even as crude flows recover. Diesel prices in the United States have reached record highs, according to CNBC. The LNG picture is similarly bleak: the IEA says Qatari and UAE LNG supplies through Hormuz have fallen by more than 300 million cubic metres per day since March 1, though other suppliers have offset much of the loss.

Asia remains the most exposed region, with about 80% of oil and oil products that used Hormuz in 2025 headed there. The crisis, which began with the war on February 28, has disrupted shipping and energy infrastructure across the Gulf; the IEA calls it the largest oil-supply disruption in global-market history.

Fragile Prospects

The near-term outlook for crude availability is better than earlier in the crisis, provided naval escorts, transfer hubs, and bypass pipelines continue functioning. That may cap crude-price spikes, but it does not restore normal shipping conditions.

The system is fragile. It depends on sustained U.S. military protection; pipeline infrastructure is vulnerable; and Iran retains the capacity to attack ships or infrastructure. A successful attack, a widening conflict, or a breakdown in escort operations could quickly reverse the recovery.

Diplomatic prospects remain weak. Iran offered to reopen Hormuz under conditions tied to restoring an earlier memorandum of understanding, but the U.S. rejected the proposal. Media reporting cited by CNBC suggested renewed escalation remained a risk.

“What institutional investors like us are really focused on is regulatory stability,” said Andrea Valeri, Blackstone (BX)’s country chairman for Italy, at a recent conference—a reminder that energy security concerns are now factoring into broader investment decisions.

For now, the crude recovery offers a measure of relief, but the broader energy trade—refined fuels, LNG, and maritime security—remains far from normal. The IEA considers full restoration of Hormuz flows the most important factor for relieving pressure on supplies, prices, and the world economy. Until then, the strait remains a chokepoint managed by warships, not markets.

Correction: An earlier version of this article incorrectly stated the seven-day average for crude transiting Hormuz. It is 13.5 million barrels per day, not 13.5 million barrels per week.