Oil at $100 a Barrel as Gulf Producers Bypass Strait of Hormuz Oil prices hold around $100 a barrel as Saudi Arabia and Gulf producers use pipelines and a US-supervised shuttle route to bypass Strait of Hormuz disruptions. Oil prices are holding at around $100 a barrel after Saudi Arabia and other Gulf producers quickly found alternative routes and tapped unused pipeline capacity to bypass disruptions in the Strait of Hormuz. The shift came after Iran began attacking ships in the strait in response to the U.S.-Israeli bombardment that started the war. The workarounds — often a clandestine game of whack-a-mole — have kept crude flowing, but they are expensive and may not be sustainable. Gulf Producers Tap Alternative RoutesSaudi Arabia turned to its East-West pipeline, which carries oil to the Red Sea port of Yanbu. From there, tankers headed through the Bab el-Mandeb Strait toward Asia. The United Arab Emirates used its pipeline cutting across neighboring Oman to Fujairah, a route that skirts the strait. Both pipelines had spare capacity, and the UAE's state oil company ADNOC and Saudi Aramco used it to keep exports from collapsing completely during the first weeks of the war.Ship operators willing to risk Iranian attack also started using a U.S.-supervised route near Oman, defying Iran's demands to use its own vetted route. They shuttled back and forth at night with location systems and mobile phones turned off, and offloaded to tankers waiting outside the strait. Flows from Kuwait, Iraq, and the UAE started to rise again.Later, attacks threatened the Bab el-Mandeb, a repeat of the Hormuz disruption. In response, the Saudis redirected Asia shipments northwest to the Mediterranean, either through the Suez Canal or, for tankers too big to use it, a pipeline across Egypt to another tanker. The oil then made a huge detour as it was shipped around Africa and back to Asia.With oil loading halted at Yanbu from Sept. 11, the Saudis shifted again, joining other Gulf producers sending oil through the U.S.-guided corridor in the Strait of Hormuz. On Monday, six supertankers loaded 12 million barrels at Saudi terminals on the Persian Gulf, according to shipping data company Kpler. U.S. officials have touted the role of the southern corridor in keeping energy flowing while their blockade increases pressure on Iran.Adm. Brad Cooper, head of U.S. Central Command, said in a video on social media Saturday that U.S. forces had assisted 2,000 commercial ship transits and the transport of more than 1 billion barrels of oil from Gulf partner nations over the past couple of months.Market Tightly Balanced Despite WarAnalysts estimate some 6 million barrels of oil per day or more have been passing through the Strait of Hormuz on the dark shuttle route on average — some 40% or more of prewar flows. Rahul Choudhary, vice president of upstream research at energy data firm Rystad Energy, calculated that with 6 million or 7 million barrels per day now flowing through the southern route, plus 2 million barrels through the pipeline to Fujairah, fully 8 million or so of the blocked 15 million barrels per day from before the war have been restored.But about 3.5 million barrels per day are being drawn down from the globe's abundant oil inventories. Meanwhile, demand has fallen by perhaps another 5 million barrels per day due to higher prices and sluggish economic growth in key markets. Add in 500,000 to 700,000 barrels per day from other suppliers such as the U.S., and that pretty much evens out the global oil market.Choudhary said their take is that the market is very tightly balanced. That is why crude prices are not exceptionally high; they are still in the $100 range and have not touched $140-$150 per barrel, which could have been the case if there was a deficit of 5-6 million barrels. In fact, Rystad foresees oil at $85-$90 per barrel in the last three months of the year, and falling to $80-$82 next year if Hormuz is reopened.High Costs and Risks LoomThe workarounds are time-consuming and expensive. Sending oil to Asia through the Suez Canal instead of the Red Sea can add as much as a month to the voyage. Meanwhile, the Hormuz shuttle trade involves expensive tankers waiting at least a day and a half in the Gulf of Oman for the ship-to-ship transfer. The demand for supertankers has sent charter rates — normally $30,000 to $50,000 per day — through the roof.Spot charter rates for Hormuz transits reached $1 million per day on Sept. 11, according to maritime data company Windward, equivalent to roughly $26 per barrel. That means shipping is a quarter of the cost, instead of the usual 1% to 3%. Markets are braced for further disruption, and Iran could yet gain an edge with continued attacks on key oil facilities.