Middle East Crude "Shadow Fleet" Breaking Through Hormuz as Depleting Inventories Amplify Oil Price Rebound Risk
Alina Collins
Three months into the Strait of Hormuz blockade, Gulf states are smuggling roughly 2 million barrels a day through a transponder-dark, lights-off 'ghost fleet', keeping oil below $100 — but global inventories have slipped under the 100-day safety threshold, and any disruption to this covert lifeline could trigger a sharp price spike.
How does the "ghost fleet" actually work?
Government-owned tankers from Gulf states switch off AIS — the automatic identification system that acts as a ship's GPS beacon — and transit the Strait of Hormuz at night with lights off. Once past, they carry out ship-to-ship transfers near the Omani coast, handing crude to larger tankers bound for Asia.
Case in point: Kuwait's tanker *Gas Umm Al Rowaisat* loaded LPG on May 28, went dark, and reappeared off India's northwest coast on June 7. It transferred its cargo to the VLCC *Badrinath*, destination Paradip, India. The UAE, Saudi Arabia, and Qatar are using the same playbook for crude and LNG.
This means → almost every vessel making it through is state-owned. Mercuria freight head Larry Johnson noted these ships "seem to have some sort of communication channel and a way to ensure safe passage." In plain terms = commercial tankers cannot get through; only national fleets with tacit clearance from all sides dare to run the strait.
How much is getting out — and is it enough?
Rapidan Energy estimates roughly 2 million barrels per day of crude and related products are leaving the Persian Gulf by various means — but pre-blockade the strait handled over 10 million b/d. The gap remains enormous.
About 90 large tankers are still trapped inside the Gulf (down from ~160 in early April). S&P Global estimates the shipping disruption has affected over 1.2 billion barrels of potential oil flows.
On June 10, President Trump claimed a secret U.S. military operation helped "more than 100 million barrels of oil and 200-plus merchant ships" transit safely, adding: "It is America, not Iran, that controls the Strait of Hormuz."
Can global inventories hold up?
Goldman Sachs calculates global crude inventories covered 101 days of demand at end-April. By end-May that had fallen to 98 days — breaching the 100-day line the industry treats as an energy-security threshold.
The U.S. Strategic Petroleum Reserve (SPR — the government's emergency crude stockpile) has dropped roughly 10% since spring to about 374 million barrels, near its lowest since July 2024. Commercial inventories are also close to multi-decade lows.
Pimco commodities head Greg Sharenow warned: "Every week that passes, 70–80 million barrels drain from the system. You can't do this forever." This means → the buffer is now counting down in weeks, not months.
What happens if stockpiles hit bottom?
IEA oil-market head Toril Bosoni warned that if drawdowns continue at the current pace, inventories could hit a critical point before summer peak demand. The IEA may then coordinate another emergency stock release.
But she cautioned that a release "is only a stopgap — it does not solve the supply problem." The supply loss is so large that "demand must contract sharply to restore balance." In plain terms = releasing reserves buys time; the real fix is either restored supply or a big drop in global oil consumption — and the latter usually means recession.
Vitol Bahrain head Tom Baker added that no matter how fast output recovers, "there will still be a gap — that's the missing 1 billion barrels of oil."
What does Iran's latest move signal?
In the early hours of June 11, Iran's IRGC Navy declared the Strait of Hormuz closed, warning all vessels to stay at anchor. Approaching the strait would be treated as "cooperation with the enemy." The IRGC said two ships that tried to pass illegally were struck.
This means → if Iran genuinely tightens enforcement, the ghost fleet's covert corridor could be severed. Combined with accelerating inventory drawdowns, whether oil can stay below $100 is the hardest question for markets in the weeks ahead.
This reflects a fragile equilibrium: today's "calm" oil price rests on two brittle pillars — the smuggling corridor staying open, and stockpiles not yet hitting zero. If either snaps, prices could move violently.
Content is for reference only, not financial advice.