26 September 2026
Executive Summary
Ship-to-ship oil-transfer operations in the Gulf of Oman have reached capacity as Saudi Arabia and other Gulf producers increasingly use the system to move crude around disruption affecting traditional export routes.
Saudi crude exports through the Strait of Hormuz are on track to reach approximately 3.6 million barrels per day during September, compared with around 900,000 barrels per day in August.
The increase requires substantially more Very Large Crude Carriers.
Industry estimates suggest between 36 and 40 additional VLCCs are required to accommodate the increase in Saudi flows.
At the same time, ship-to-ship operations outside Hormuz are struggling to process the additional vessels.
Transfer operations that previously took approximately five to seven days are now taking nearly 10 days.
The pressure has helped push Middle East-to-China VLCC charter rates to record levels.
The risk has moved beyond whether oil can leave the Gulf: the logistics system being used to keep that oil moving is itself reaching capacity.
UK Impact
UK and European businesses may experience the consequences through:
- Oil prices.
- Diesel.
- Aviation fuel.
- Petrochemicals.
- Marine freight.
- Tanker availability.
- Insurance.
- Longer delivery schedules.
Higher tanker utilisation also matters beyond Middle Eastern oil.
Every vessel tied up waiting for or undertaking a ship-to-ship operation is temporarily unavailable elsewhere in the global tanker market.
Global Impact
Saudi Aramco has reportedly sold more than 60 million barrels for ship-to-ship transfer near Sohar, Oman, during September and October.
Other Gulf producers including Iraq and the UAE are also using transfer operations outside Hormuz.
This has created queues for:
- Tugboats.
- Transfer equipment.
- Specialist labour.
- Tankers.
- Suitable anchorages.
The daily charter rate for a VLCC transporting Middle Eastern oil to China reached approximately $1.27 million earlier this week.
Buyers are consequently considering alternative arrangements.
Chinese buyers have asked about moving transfers towards:
- Western India.
- Malaysia.
Some cargoes are instead being transported directly to refineries.
Our View
This is a classic example of a successful contingency plan creating a secondary bottleneck.
Businesses should ask:
- How long are current STS queues?
- Where is the nominated transfer location?
- Is equipment available?
- Are tugboats available?
- Is specialist labour available?
- How many days will the transfer require?
- What is the current VLCC charter rate?
- Who pays waiting-time costs?
- Could demurrage arise?
- Is direct refinery delivery possible?
- Could India be used as an alternative transfer location?
- Could Malaysia be used?
- Does changing transfer location increase voyage time?
- Are additional marine-insurance requirements involved?
- Could vessel shortages affect unrelated oil routes?
- What happens if Gulf export volumes increase further?
Businesses should also avoid interpreting increased Saudi exports as evidence that logistics conditions have normalised.
Oil is moving because increasingly complicated arrangements are being used to keep it moving.
Those arrangements consume more vessels, more time and more supporting infrastructure.
A workaround stops being resilient when everybody needs to use the same workaround.
Risk Indicator: SEVERE – GULF OF OMAN, TANKER CAPACITY & OIL LOGISTICS
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The information contained within these Market Alerts is provided for general market awareness and informational purposes only. It does not constitute financial, legal, investment, regulatory or insurance advice. Whilst every effort has been made to ensure accuracy at the time of publication using multiple reputable and independently verified sources, geopolitical events, legislation, regulation and market conditions may change rapidly. Readers should obtain appropriate professional advice before acting upon any information contained herein.
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