21/03/26
Gulf producers urge US to tackle Hormuz closure head-on
Dubai, 21 March (Argus) — Mideast Gulf oil producers are urging the US to
address the disruption to oil flows through the strait of Hormuz "straight on",
warning that interim measures such as tapping into Iran's so-called
"oil-on-water" risk strengthening Tehran's position while leaving regional
producers exposed, senior Gulf officials have told Argus. "The issue is not
supply. The 140mn bl figure discussed by US officials on oil-on-water does not
indicate the full picture," one senior Gulf official said. "Oil-on-water today
includes production from Saudi Arabia, the UAE, Kuwait and Iraq, as well as from
our western oil company partners in joint ventures, loaded on tankers stuck
within the strait." The US Treasury Department's sanctions enforcement arm, the
Office of Foreign Assets Control (OFAC), issued a licence late on Friday
allowing the sale, delivery and offloading of Iranian crude loaded into tankers
on or before 20 March, until 19 April. The OFAC licence also allows the import
of Iranian crude into the US for further resale. There are no conditions
attached to payments for such cargoes. US Treasury Secretary Scott Bessent
estimated on 19 March there were 140mn barrels of Iranian oil at sea , without
providing further detail. These US efforts to stabilise markets by leaning on
floating storage volumes are viewed in Mideast Gulf capitals as a temporary fix,
senior Gulf officials said, that fails to address directly the core issue — the
effective disruption of the world's most critical energy transit chokepoint.
Gulf officials warned that such measures risk creating an uneven dynamic in
which Iranian crude continues to flow — primarily to China — while exports from
US-aligned Gulf producers remain constrained. "China is the most obvious buyer
of Iranian crude, but what about Japan, or South Korea — our buyers and US
allies?" the senior Gulf official asked, noting that interdicting Iranian flows
is not straightforward and that Tehran has developed sufficient mechanisms to
bypass sanctions and retain access to revenues. A second senior Gulf official
said producers in the region cannot accept an outcome where "Iran takes the
strait of Hormuz hostage," describing such a scenario as a structural shift in
global energy markets. Gulf capitals are increasingly concerned that Washington
could move to wind down the conflict before securing a durable resolution on
maritime access, leaving Iran with de facto control over traffic through the
strait. "Nobody in the Mideast Gulf asked for this war, but now that we find
ourselves in the midst of it, the US should sort this out," the first official
said. "The US should finish the job and not forget about its allies in the
region," both officials said separately. US president Donald Trump said late on
Friday that he has no plans to end the war quickly, telling reporters that "you
don't do a ceasefire when you're obliterating the other side." But he also
signalled that Washington is "very close" to achieving key military objectives
as it considers winding down operations — messaging that has added to unease in
Gulf capitals. The comments follow a week of the most extensive damage yet to
energy infrastructure across the Mideast Gulf. For Mideast Gulf officials,
reopening the strait of Hormuz remains the only viable path to restoring market
balance and preventing Iran from exerting sustained influence over global oil
prices. "The US needs to find a solution, and it is faced with three options,"
the first Gulf official said. "A compromise with Iran over freedom of passage,
alignment with Iran's dictates, or the use of force." Concern in Gulf capitals
is growing, and an outcome in which Iran exercises control over the strait of
Hormuz is creating a perception that they have been left behind. This, in turn,
could complicate relations between the US and its regional allies, the senior
Gulf officials said. By Bachar Halabi Send comments and request more information
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