With its East-West pipeline shut down, the Straight of Hormuz is the best avenue available and its spigot has recently opened up. Will it last?

A cargo vessel seen from another ship off the coast of Oman in June. The Strait of Hormuz is back in focus as a key Saudi pipeline is shut down.

The closure of a key Saudi pipeline that the kingdom has recently relied upon to export oil via the Red Sea has turned the spotlight back on the Strait of Hormuz, as Saudi Arabia and other Persian Gulf exporters work to keep their crude oil flowing to global markets.

The big question is how much oil will Saudi Arabia be able to export through the strait, where you still have "good days and bad days," said Robin Mills, CEO of Qamar Energy, a consulting firm in the United Arab Emirates.

"It's all very cloudy, but a reasonable average to me is something between 8 million barrels a day to 10 million barrels a day getting through the strait," a mix of crude and crude products but mostly crude, he said.

Before the war, the strait was the conduit for about 20 million barrels of oil exports, the vast majority headed to Asia. Energy Secretary Chris Wright told Fox News this week that with the help of U.S. Navy escorts about 18 million barrels a day made their way out through Hormuz recently. The Energy Department has not returned a request for a seven-day average figure.

A number of factors make it hard to quantify precisely how much crude and crude products are finding their way out of the Persian Gulf through Hormuz, including "dark" crossings, or vessels attempting the passage with their GPS-like signals turned off in an attempt to evade Iranian attacks.

Since the Iran war began, Saudi Arabia had dramatically expanded the use of its East-West pipeline to keep its exports going and to supply its own refineries. The route meant that a material amount of Saudi's oil exports could avoid the Hormuz battle zone.

But Iran-backed militias in Iraq used drones last week to attack the pipeline, reducing to charred rubble key components of the 750-mile line, about the driving distance between New York City and Indianapolis. Saudi Arabia said it has temporarily shut the pipeline down for repairs.

Some market participants believe the Saudis can get the pipeline back to at least 50% capacity within days. Even if the kingdom is successful, however, the pipeline now appears to be in the battlefield and vulnerable to further attacks.

That has shifted Saudi Arabia's emphasis back to Hormuz, its traditional route for exporting much of its oil. More Hormuz transits also mean there will be more oil tankers in the waterway that can serve as targets for potential Iranian attacks.

"It's a bit of a puzzle why the Iranians haven't been more aggressive," Mills said. Maybe threatening to attack is enough of a deterrent, and maybe military escorts are effective, Mills said. "It's probably a mix of those."

Even if the Saudis and other Persian Gulf nations can, in a best-case scenario, keep more crude flowing through Hormuz, experts say it would only have a marginal effect on the availability of fuels like gasoline and diesel in global markets. Prices at U.S. pumps are expected to remain higher for longer, as the physical market for oil products remains tight.

The U.S. average retail diesel price hit a fresh all-time high of $6.40 a gallon on Thursday, the latest in a string of records. The national average for one gallon of regular gasoline is up 16 cents from last week to $4.43, more than a dollar more than a year ago, according to AAA. Retail gasoline rose 13 cents in the prior week, veering off its usual path of declining after the Labor Day holiday.

Refining capacity is crucial bottleneck

The East-West pipeline had a nominal capacity for up to 7 million barrels of oil a day, with roughly 2 million going to Saudi's domestic market. By most estimates, the pipeline was the conduit for about 3 million to 4 million barrels a day of crude before it shut down last week.

Saudi Arabia has a good track record of righting its output fast. Back in 2019, following attacks on oil-processing facilities in its east, the kingdom surprised the world and restored its production within days.

Last week's attacks on the pipeline were "precision hits" at a pump station, said David Jorbenaze, a global oil-market analyst at commodities data-provider ICIS in London.

But Saudi Arabia can restore "very quickly" about 2 million to 2.5 million barrels a day - so roughly half its recent flow - within days, provided there are no further attacks, Jorbenaze said.

Fixes are likely to be done in phases, and the kingdom is probably a few weeks from a return to 70% to 80% of previous flows, and perhaps up to six weeks from having the pipeline back on its feet completely, he added.

"That could be done very quickly. And that's one of the reasons why we see the flat [crude futures prices] today," he said. "That's not the only reason, but that sort of took the edge off the sharp shock we've seen on the prices."

London-traded Brent crude futures (BRN00), the international benchmark, were down 1% on Thursday, trading under $104 a barrel and flat for the week. They topped $107 a barrel on Monday, the first trading day after the pipeline shutdown.

Ship-to-ship maneuvers are keeping some oil flowing

One way crude and a certain amount of crude products are leaving the Persian Gulf and transiting Hormuz is through ship-to-ship transfers.

Patterns vary, Qamar Energy's Mills said. Generally speaking, however, tanker convoys, escorted by air and sea by the U.S. military, do the perilous transit through the Strait of Hormuz to the Gulf of Oman.

Then, in safer waters, national or third-party vessels await for ship-to-ship transfers from the convoys to then sail to the buyer's final destinations.

The UAE is also able to export some crude through its Fujairah's pipeline, which carries about 1.6 million barrels a day. Other producers are in worse binds - Iraq, the Middle East's No. 2 oil producer, has no tanker fleet at its disposal, and is able to export only a small portion of its crude through a northern pipeline. It has been offering its crude to the UAE at a discount, Mills said.

Cobbled-together Hormuz flows and even a fully restored East-West pipeline would only marginally help the availability of fuels like gasoline and diesel. Every bit helps, but here's not a lot of spare refining capacity with refineries in Russia and in the Middle East offline.

Adding another dimension to the oil shock, Russia has carried out deadly, regular strikes on Kyiv in recent weeks, and Ukraine has assailed Russia's energy infrastructure, with fresh attacks overnight despite calls for a temporary pause on targeting energy infrastructure.

Back when Russian invaded Ukraine in February 2022, experts were divided in how long the conflict would last, with some believing it would last months or about a year, ICIS's Jorbenaze said.

The current conflict has the hallmarks of a long-term conflict as well, he added.

See also: It's not just Hormuz. Another war is providing fresh price shocks to fuel and food.

"The energy market is operating on two hot kinetic conflicts," Jorbenaze said. "You have two major oil producers in the world both engaged in the conflict zones. It doesn't get any more volatile than that."

-Claudia Assis