Oil prices continue to oscillate higher, Iran's exports not decreasing but increasing, US-Iran covert war in the Strait of Hormuz

The turmoil caused by the Strait of Hormuz is still stirring global markets.

According to Xinhua News Agency, the International Energy Agency (IEA) issued a statement on March 11 saying that 32 member countries unanimously agreed to release 400 million barrels of strategic oil reserves to address the global oil supply tightness caused by military strikes by the United States and Israel on Iran. IEA Director Fatih Birol stated that the release of strategic reserves will be implemented in phases based on each member country’s specific circumstances within an appropriate timeframe. The IEA will announce detailed plans for releasing the 400 million barrels of oil reserves later and will continue to closely monitor changes in the global oil and natural gas markets.

Data shows this is the largest strategic oil reserve release in IEA history, with the U.S. releasing 172 million barrels.

However, this decision did not trigger an active market response. After the announcement, international oil prices briefly fell by $3 before quickly rebounding. As of March 12, the benchmark Brent crude oil traded overnight at around $100 per barrel, then slightly declined. At 2:50 a.m. Eastern Time, Brent was at $98.2 per barrel. Meanwhile, U.S. WTI crude briefly surged to $94.8 per barrel before falling back to $92.9.

On the other hand, Iran’s oil exports are currently minimally affected. Reuters reported on March 11 that, despite Iran’s control of the Strait of Hormuz impacting other Gulf countries’ oil exports, Iran’s own oil continues to be transported through the strait at near-normal levels. Some data even suggest Iran has exported more oil than before the conflict.

Qian Xuming, researcher at Shanghai International Studies University’s Middle East Research Institute and director of energy research projects, told The Paper (www.thepaper.cn) that the current fluctuations in international oil prices are mainly due to market psychology shocks after the blockade of the Strait of Hormuz, reflecting financial market volatility rather than real supply and demand. The “counterintuitive” increase in Iran’s oil exports not only demonstrates Iran’s control over the strait but also relates to the U.S. attitude of “turning a blind eye” to its so-called “shadow fleet” in the region. “Iran’s blockade is targeted; its main goal is ships supporting the U.S. and Israel,” he said. “And Trump is very concerned about oil prices, so he’s allowing some ships that should be under U.S. sanctions to pass.”

Iran’s oil exports exceed pre-war levels

Reuters cited analysis from tanker tracking firm Kpler, which specializes in monitoring the so-called “shadow fleet,” stating that since the U.S. and Israel launched attacks on Iran on February 28, Iran has exported about 13.7 million barrels of oil. Another vessel tracking service, Kpler, estimates that in the first 11 days of March, Iran exported approximately 16.5 million barrels.

According to these sources, from February 28 to March 11, Iran’s daily oil exports ranged from 1.1 million to 1.5 million barrels. Kpler’s data shows Iran’s average daily export last year was 1.69 million barrels, meaning despite the blockade affecting other Gulf countries, Iran continues to export oil through the Strait of Hormuz at a normal pace.

Data from the UK Maritime Trade Organization shows that since the military actions began on February 28, there have been 17 recorded attacks on ships. Reuters also reports that Iran has begun laying mines in the Strait of Hormuz. “Iran’s blockade is targeted,” said Qian Xuming. “Iran has always stated, ‘Support the U.S. and Israel, I’ll hit your oil tankers,’ and ships not supporting them are unlikely to be targeted. This targeted blockade allows control of the strait—blocking others but not their own ships.”

Reuters also notes that under current circumstances, Iran’s continued oil exports may also involve “important roles” played by the U.S. government. The report states that the U.S. has not attempted to intercept Iranian oil tankers or the so-called “shadow fleet” ships in the Strait of Hormuz or other waters. In contrast, earlier this year, the U.S. raided Venezuela and forcibly detained President Maduro’s wife, after imposing a maritime blockade and seizing several ships attempting to enter or leave Venezuela.

David Tannenbaum, director of Blackstone Compliance Services, told Reuters, “Considering the U.S. seized vessels related to Venezuela last December, I am surprised that before this conflict with Iran, they haven’t taken similar actions even now.”

James Laitburn, founder of Cavaliar Shipping, told Reuters that as long as Iranian ships are operating in the region, Iran has motivation to keep the Strait of Hormuz at least partially open. “If the U.S. seizes tankers, Iran could reduce losses by completely closing the strait (e.g., mine-laying).”

The Wall Street Journal recently cited Lloyd’s List Intelligence, which reports that only one or two oil or natural gas ships over 10,000 tons pass through the strait daily in recent days. About half of these ships in the first eight days of March are part of the so-called “shadow fleet.”

“Trump still cares very much about oil prices,” said Qian Xuming. “When exports from other Gulf countries are blocked, Iran still exports, increasing supply to the international market. Trump, aiming to stabilize U.S. domestic oil prices, turns a blind eye to these ‘shadow fleets’ and even allows the release of strategic reserves. So overall, the current conflict has not caused much damage to the upstream oil industry; the real issue remains the Strait of Hormuz.”

Strikes on Iran’s oil facilities are the U.S. “doomsday option”

In fact, the strange “tacit understanding” between the U.S. and Iran regarding oil exports and prices is not a first. U.S. media reports that although strikes on Iran’s oil sector would effectively cut off Iran’s government revenue, Iran’s oil “cash flow” has not been significantly affected during the recent conflicts, including the “12-day war” last year.

On the evening of March 7, Israel launched attacks on Tehran and nearby oil refineries and fuel storage facilities. This was the first time Iran’s oil infrastructure was targeted in this round of conflict. However, Israel’s actions drew strong U.S. disapproval. Axios reported on March 10 that the Trump administration demanded Israel cease attacks on Iran’s energy infrastructure, especially oil facilities. An Israeli official said the U.S. asked Israel to “notify” them in advance of any strikes on Iran’s oil infrastructure.

This request highlights the importance of oil in the current conflict. Axios cited anonymous U.S. officials saying that disagreements exist between the U.S. and Israel on how to handle Iran’s oil facilities. The U.S. plans to cooperate with Iran’s oil industry after the conflict, similar to measures taken against Venezuela, but also worries that strikes on Iran’s oil infrastructure could provoke large-scale retaliatory attacks on Gulf energy facilities.

Sources say Trump views attacking Iran’s oil facilities as a “doomsday option,” to be used only if Iran deliberately strikes Gulf energy infrastructure first.

Meanwhile, Kharg Island, Iran’s key oil export hub in the Persian Gulf, remains outside the current turmoil. Located 25 km from Iran’s coast, with an area of 20 square kilometers, Kharg is the terminus for pipelines from Iran’s central and western oil fields and a major oil transfer station in the Persian Gulf. Public data shows that Kharg accounts for about 90% of Iran’s oil exports. The Guardian reports that normally, 1.3 to 1.6 million barrels of oil are shipped daily from Kharg, but before the February attacks, Iran had ramped up exports to about 3 million barrels per day.

The Guardian notes that despite reports of U.S. and Israeli interest in capturing Kharg Island, in reality, although over 5,000 targets in Iran have been attacked, Kharg has not been hit by U.S. or Israeli bombers.

Analysts believe the main reason the U.S. has not targeted Kharg is concern over oil prices. Former British Army intelligence officer Lennart Nusbacher told The Guardian that damaging Kharg’s oil export facilities could cause prices to spike sharply and remain high, with far-reaching economic impacts.

“If Kharg is attacked, we might see oil prices jump from $120 to $150 per barrel,” said Neil Quilliam of Chatham House in an interview with The Guardian. “This could lead to a real deadlock between the U.S. and Iran. If the U.S. takes control of Iran’s oil resources, Iran’s oil industry would be divided. Iran can produce oil but cannot export it, and the U.S. cannot produce oil. This would cause severe market volatility.”

“Trump is very concerned about oil prices,” said Qian Xuming. “So he’s very cautious about handling oil-related issues. That’s why he’s stopping Israel from attacking Iran’s oil facilities, turning a blind eye to the shadow fleet, and allowing strategic reserves to be released. Overall, the current situation has not caused much damage to the upstream oil industry; the real problem remains the Strait of Hormuz.”

Blocked oil transport “artery”

In recent days, international crude prices have experienced rollercoaster swings. On March 10, prices sharply reversed: the previous day, Brent and WTI both surged to nearly $119, hitting recent highs; by Asian morning, Brent had fallen to around $92, and WTI to about $88, with daily drops over 6%. This was mainly because Trump announced that the Middle East conflict “might end very soon,” with U.S. military operations “basically complete,” faster than expected. On March 12, prices again briefly rose to over $100 per barrel.

Undoubtedly, rising oil prices are not necessarily bad for Iran, but for Trump and the Republicans facing midterm elections, higher prices are a political cost they prefer to avoid. Iranian Foreign Minister Amir Abdollahian told PBS on March 9 that the surge in oil prices was not Iran’s fault. “This is not our plan; the slowdown or suspension of oil production and transportation is not because of us but because Israel and the U.S. attacked and invaded us. They have made the region unsafe.”

It’s worth noting that although recent prices are $20–30 higher than pre-war levels, they have not yet reached the $150 per barrel spike seen during the Iraq war. Qian Xuming explains that recent market stability is partly due to sluggish global economies and the development of renewable energy technologies, which have kept supply and demand relatively balanced. “The current situation is more about financial market psychology and speculation, as the transportation channels are blocked but upstream production remains largely unaffected. If the conflict ends soon and the Strait of Hormuz reopens, I estimate prices could quickly return to around $70 per barrel.”

Long-term, this crisis might reshape the global energy landscape. Gulf countries may consider alternative routes for the Strait of Hormuz, and energy-importing nations might accelerate renewable energy development to reduce reliance on oil.

Media outlets like Reuters report that after Iran announced the blockade, Saudi Arabia has increased exports through the Red Sea port of Yanbu, but current export levels are still far below what’s needed to compensate for the Strait’s closure.

Energy consultancy Wood Mackenzie estimates that the conflict has reduced Gulf oil and oil product exports by about 15 million barrels per day, which could push prices up to $150 per barrel.

“Oil has strong financial attributes,” said Qian Xuming. “Current price fluctuations are largely driven by psychological expectations and speculative trading. Ultimately, the problem still comes down to the ‘blocked arteries.’ Short-term blockages for a few days are manageable, but prolonged closures will definitely impact the international landscape.”