Brent crude futures were directionless overnight, oscillating between $100 and $103 per barrel after news broke that Iraq had found a workaround for the Hormuz chokepoint by restarting exports through Turkey’s Ceyhan port.
Bloomberg reports that North Oil Co.’s oil pipeline to Ceyhan port, with an expected initial export capacity of 250,000 barrels, has begun operation. That is in addition to 210,000 barrels per day from Kurdistan through the northern pipeline, according to Oil Minister Hayyan Abdul Ghani.
Ceyhan exports crude from the Kurdistan and Kirkuk fields (Iraq) to the Mediterranean port, effectively bypassing the chaos at the Hormuz chokepoint and in the Gulf region.
Disruption of tanker flows in the critical waterway forced Iraqi oil production to plunge to about 1.4 million barrels per day, roughly one-third of pre-Hormuz closure levels.
Three weeks into the US-Iran conflict, tanker activity on the waterway has slowed to a crawl, at just about 400,000 barrels per day, compared to the pre-Hormuz closure average of 14 million barrels per day.
Kpler oil analyst Muyu Xu warned, “The blockade is now the worst disruption to oil flows ever. Real barrels are now disappearing from global oil markets, which can lead to demand destruction in the weeks to come.”
Iraq is following Saudi Arabia’s playbook of shipping crude through pipelines rather than through Hormuz as IRGC drone and missile threats persist. Saudi Aramco shifted its crude flows through the East-West pipeline to export terminals at Yanbu and Al Muajjiz on the kingdom’s Red Sea coast.
Meanwhile, Iran-linked vessels accounted for 35% of the 20 crude tankers that made outbound Hormuz transits in the first week of the conflict, according to Kpler. About a week later, that number rose to five of the eight tankers that left the region, suggesting that Iran’s control of the critical waterway has significantly increased.
On Tuesday, the conflict escalated further with the confirmation of the killing of Ali Larijani, secretary of Iran’s Supreme National Security Council.
According to Aaron Stein, president of the Foreign Policy Research Institute, “The Larijani killing is a big deal, and may make Iran more desperate to disrupt oil flows.”
“Trump is obviously being pressured to escort tankers, so we’re in for the possibility of very tense US operations in ways I’m certain the Navy would like to avoid,” Stein said.
On Wednesday, Iran’s Foreign Minister Abbas Araghchi told Al Jazeera about new rules that should be imposed on the critical waterway.
“We need to design new arrangements for the Strait of Hormuz and the way ships pass through it in the future after the war so that peaceful navigation through this waterway can be permanently maintained under clear regulations with consideration for Iran’s interests and the interests of the region,” Araghchi said.
He said, “It should guarantee that safe passage through the strait takes place under specific conditions,” adding that conditions should “ensure peacefulness. We do not want to witness another war in the region and we do not want to see the strait closed again.”
Goldman analysts, led by Yulia Zhestkova Grigsby, showed clients on Tuesday that shipping traffic through Hormuz remains down 98% from normal levels (4-day moving average).
The estimated total hit to oil flows from the Persian Gulf stands at 15 mb/d, 15 times larger than the peak April 2022 hit to Russian oil production.
Iranian crude exports dominate the Strait.
“With no end in sight to hostilities, shut-ins rising on a daily basis, and the Strait technically closed, we remain of the view that Brent is set to remain in a new, higher $95-to-$110 range,” Westpac Banking analyst Robert Rennie wrote in a note.
“Were we to see a major refinery plant hit or confirmation of additional mining of the strait, we would expect that range to extend higher by another $10-$20,” Rennie added.
The Strait of Hormuz situation won’t return to its pre-war status.
— محمدباقر قالیباف | MB Ghalibaf (@mb_ghalibaf) March 17, 2026
The takeaway here is that Gulf countries, such as Iraq and Saudi Arabia, are rerouting crude flows from tanker transit through the waterway to pipelines out of the hostile region, as Iran remains largely in control of the Strait, necessarily (and dramatically) reducing global energy supply (for longer).
