Oil Transit Routes Are Under Pressure: What Could Happen to Crude Prices Next?
The global oil market is entering a more complicated phase as disruptions spread beyond a single shipping chokepoint. The Strait of Hormuz remains under severe pressure, while attacks affecting Saudi Arabia's East-West pipeline and concerns around the Bab el-Mandeb route are reducing the number of practical alternatives available to oil exporters.
The key question for markets is no longer simply whether one route is open or closed. It is how much crude can actually move, how quickly alternative routes can compensate, and how long existing inventories can absorb the disruption.
Recent reporting shows that traffic through Hormuz remains well below normal levels. Reuters reported that only four commodity vessels crossed the strait on September 17, compared with a 10-day average of 16, while traffic through Bab el-Mandeb was also below its recent average.
Why oil transit routes matter so much
Oil is a globally traded commodity, but its transportation network is concentrated around a relatively small number of strategic waterways.
The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the wider Indian Ocean. It is one of the world's most important energy corridors. The International Energy Agency says the disruption to Middle Eastern maritime routes has created an exceptionally large supply shock, while also warning that AIS-based shipping data can understate actual traffic because some vessels are operating with their tracking systems switched off.
That uncertainty itself becomes a market problem.
Traders must estimate:
- How many tankers are actually moving
- How much crude is being loaded
- Whether vessels can obtain insurance
- How long alternative routes will remain available
- How much inventory is available in consuming countries
When visibility falls, the risk premium in crude prices can rise even before a physical shortage becomes evident.
The Saudi pipeline adds another layer of risk
One of the most important developments is the pressure on Saudi Arabia's East-West pipeline.
The pipeline was designed to provide Saudi crude with an alternative export route toward the Red Sea, reducing dependence on the Strait of Hormuz. But recent attacks have disrupted that alternative.
Reuters reported that the shutdown threatened a significant amount of global oil supply and contributed to the cancellation of some Saudi shipments from the Red Sea port of Yanbu.
This creates an important distinction.
A disruption to Hormuz is one problem. A disruption to a major bypass route is another. When both are affected at the same time, the global oil system loses redundancy.
What about the Bab el-Mandeb?
The Bab el-Mandeb is another strategic maritime chokepoint connecting the Red Sea with the Gulf of Aden.
It matters because oil moving from the Middle East toward Europe and other markets can depend on Red Sea shipping routes. If security risks increase, tankers may need to take longer routes, adding:
- Higher freight costs
- Higher insurance premiums
- Longer delivery times
- Greater fuel consumption
- Increased uncertainty for refiners
The latest shipping data indicates that Bab el-Mandeb traffic has also remained below its 10-day average.
Why crude prices can rise even without a complete supply shutdown
Oil prices do not respond only to barrels that have already disappeared from the market.
They also respond to expected future shortages.
For example, if traders believe that disruptions could continue for several weeks, refiners may try to secure crude earlier. This can increase competition for available cargoes and push futures prices higher.
There is also a second factor: transportation.
A barrel of crude that can technically be delivered may become considerably more expensive to transport when vessels require longer routes and higher war-risk insurance.
This means the market can experience a "chokepoint premium" even before global production falls dramatically.
Three possible directions for oil prices
Rather than focusing on one precise price target, the market can be viewed through three broad scenarios.
1. Routes gradually normalise
If shipping through Hormuz improves and damaged infrastructure is restored, the immediate geopolitical premium could begin to decline.
Higher-cost emergency shipments could also be replaced by more normal trading patterns.
In this scenario, crude prices would increasingly return to fundamentals such as global demand, inventories and OPEC+ production.
2. Disruptions remain prolonged
If shipping remains restricted for an extended period, inventories could become increasingly important.
The longer the disruption lasts, the greater the pressure on refiners and importing economies to secure alternative supplies.
This could keep crude prices elevated even if global oil production itself has not collapsed.
3. More export infrastructure is affected
This is the scenario that could create a substantially larger supply shock.
If additional pipelines, ports, terminals or shipping corridors are disrupted simultaneously, the market would have fewer options for moving crude.
The risk would then shift from "higher transportation costs" to an actual shortage of deliverable barrels.
That distinction is critical for price formation.
Why inventories are the next thing to watch
Inventories provide a temporary buffer.
When shipments are disrupted, refiners can initially rely on crude already sitting in storage. Strategic reserves and commercial inventories can therefore delay the impact of a physical supply shock.
But inventories are not unlimited.
Research on the 2026 Hormuz disruption has highlighted how stockpiles, emergency releases, rerouting and demand reduction have helped absorb some of the initial shock. The longer those buffers are required, however, the more difficult it becomes to prevent the disruption from feeding into prices and the broader economy.
India could feel the impact quickly
For India, crude oil prices are particularly important because the country imports a large share of its petroleum requirements.
A prolonged rise in international crude prices can affect more than petrol and diesel.
Potential effects include:
Higher crude → higher refining costs → pressure on fuel prices → higher transportation costs → increased costs for businesses and consumers.
It can also influence India's import bill, currency markets, inflation expectations and corporate margins.
The impact on consumers, however, does not necessarily move one-for-one with international crude prices because domestic fuel pricing, taxes, refining margins and currency movements also matter.
The bigger story: oil markets are losing route flexibility
The most important development may not be today's Brent price.
It is the shrinking number of reliable routes available to move Middle Eastern energy to global consumers.
The IEA's Middle East maritime monitor shows how severely shipping patterns have changed since the conflict began, while also cautioning that AIS data has become less reliable because vessels are increasingly switching off or manipulating tracking signals.
That means traders are dealing with two risks simultaneously:
Physical risk: fewer barrels may reach buyers.
Information risk: it is becoming harder to know exactly how many barrels are moving.
For an oil market, that combination can produce unusually sharp price swings.
What traders will watch next
The next major signals are likely to come from:
- Strait of Hormuz tanker traffic
- Repairs to Saudi Arabia's East-West pipeline
- Bab el-Mandeb shipping volumes
- Saudi and Gulf crude export loadings
- Commercial and strategic oil inventories
- OPEC+ production decisions
- Tanker freight and war-risk insurance costs
- Refinery demand in Asia and Europe
The direction of crude prices will ultimately depend on whether alternative supply routes can compensate for disrupted flows.
Bottom line
The oil market is currently dealing with more than a conventional supply-demand imbalance. It is dealing with a transportation and infrastructure problem.
If major routes progressively reopen, the geopolitical premium could ease. If disruptions persist, inventories and alternative supplies will come under greater pressure. And if additional export infrastructure is hit, the market could face a much more serious physical supply shortage.
For now, the condition of the world's oil transit network—not just the number on the Brent futures screen—will be one of the most important indicators for where crude prices go next.
*This article is an independent explainer based on publicly reported developments and is not investment advice.*
Reviewed by Aparna Decors
on
September 20, 2026
Rating:
