Navigating the Blockade: How Middle Eastern Nations Rely on Risky Ship-to-Ship Oil Transfers

Saudi Arabia’s oil exports have faced significant disruptions after Iran-aligned Houthis damaged its crucial East-West pipeline, which previously helped bypass the blockade of the Strait of Hormuz—a vital global oil chokepoint. With the strait effectively closed and Bab al-Nedeb falling under Houthi control, Riyadh has been forced to seek alternative export routes, increasingly offering crude to buyers through ship-to-ship transfers off Oman. As commercial vessels refuse to navigate the conflict zone, Saudi Arabia transports crude to Oman’s Sohar port just outside the strait, where the oil is transferred between tankers.

Iran closed the strait, which once handled nearly a fifth of pre-war global energy, in response to the United States-Israeli war, utilizing the waterway as leverage in ongoing talks. Media reports indicate that the closure and soaring oil prices have driven the US and its regional allies to adopt shadow tactics similar to Iran's long-standing methods for exporting its own crude.

Two ports have become central to bypassing the Strait of Hormuz: Sohar in Oman and the Port of Fujairah in the United Arab Emirates. Sohar is a major deepwater industrial hub handling bulk cargo, petrochemicals, and container traffic, offering direct overland connectivity to Arabian Peninsula markets. The UAE’s Port of Fujairah, situated on the eastern coast, serves as a massive bunkering and crude oil storage hub, providing an open-ocean anchorage crucial for offshore staging and energy exports.

These ports operate near boundaries established by the Persian Gulf Strait Authority, a new Iranian body managing the strait. Iranian authorities have targeted vessels utilizing unauthorized routes closer to Omani waters. Meanwhile, the US military has reportedly assisted numerous secretive ship-to-ship oil transfers since early May to maintain the flow of Gulf energy exports.

Ship-to-ship (STS) transfers involve maritime exchanges where crude oil or liquefied natural gas (LNG) is moved directly between two vessels at sea. This process serves as a vital logistical bridge when direct port access is restricted, requiring meticulous coordination and favorable sea conditions to prevent spills and collisions. Typically, a larger vessel maintains a steady course or anchors while a maneuvering ship approaches slowly. Hulls are brought parallel and protected by pneumatic rubber fenders, and trackers are turned off to maintain secrecy. After safety checks, pumps transfer the oil through connected hoses while monitoring pressure and weather conditions.

Riyadh previously relied on the 1,200km (746-mile) East-West pipeline connecting eastern oil fields to Yanbu port on the Red Sea. Following drone attacks and subsequent closure, Rishi Rajanala, research specialist in Oil Americas at LSEG Data & Analytics, noted that shipping more crude from Gulf terminals through ship-to-ship transfers outside the strait, such as in Sohar, became the primary option. Although Gulf producers have utilized this method, volumes remain below pre-war levels due to tanker availability, insurance, and freight costs.

Rahul Choudhary, VP Upstream Research at Rystad Energy, stated that Hormuz-route exports have risen, exceeding 2 million barrels per day in the first two weeks of the month, driven by Aramco offering additional loadings to Asian refiners out of Sohar. In addition to Saudi Arabia, independent trackers and media reports have identified Kuwait and Qatar utilizing similar tactics to bypass the Strait of Hormuz.

Despite their utility, ship-to-ship transfers carry severe risks and inefficiencies, frequently involving aging vessels with poor maintenance, uninspected hoses, turned-off AIS tracking, and a lack of insurance. TankerTrackers reported that ship-to-ship transfers reached 7.15 million barrels per day over a recent 14-day period, marking a 56 percent increase from the previous month.

The primary advantage of these transfers lies in navigating a volatile Middle East where major transport companies refuse to enter the Strait of Hormuz due to attack threats from Iran or the US. Gulf nations absorb the risks by sending darkened tankers across the strait to meet traditional oil carriers in safer waters, which then ferry the energy to markets in China, India, South Korea, Japan, and elsewhere.

Oscar Seikaly, CEO of the NSI Insurance Group, noted that traditional insurance for ship-to-ship transfers is highly complicated, involving physical vessels, cargo, pollution, collision liabilities, and war-risk cover. Because commercial insurers rarely provide broad coverage during wartime disruptions, much of the risk remains with the producing countries, which often rely on sovereign-backed self-insurance arrangements and private markets since most of the oil belongs to national oil companies.