Hormuz traffic at risk—oil eyes $150 as Saudi reroutes Red Sea flows and Pakistan boosts reserves

Oil markets are bracing for a renewed supply shock as analysts warn that if traffic through the Strait of Hormuz does not resume soon, prices could break above the $139 intraday high seen in 2022 after Russia’s invasion of Ukraine and potentially move toward $150 per barrel by September. The concern is rooted in the strategic chokepoint’s role in global crude and product flows, where even partial disruptions can quickly tighten physical balances. In parallel, shipping data indicate that Saudi Arabia has been rerouting exports away from the Hormuz corridor toward Red Sea infrastructure, using its East-West Petroline to Yanbu. The combined message from these reports is that the market is testing how much “workaround capacity” exists—and how long it can be sustained—before traders price a higher-risk regime. Geopolitically, the cluster points to a prolonged contest over maritime energy routes and the ability of Gulf producers to compensate for chokepoint losses. Saudi Arabia’s Red Sea bypass peaking at roughly 4.07 million barrels per day in March before falling to about 2.3 million by June suggests that rerouting is not a perfect substitute: constraints can emerge from port throughput, pipeline logistics, tanker availability, and downstream demand patterns. Russia and Ukraine are referenced through the 2022 price benchmark, underscoring how cross-theater shocks can amplify risk premia when energy security deteriorates. Pakistan’s decision to increase strategic petroleum reserves and adjust refining policy adds a second layer: energy security planning is becoming more explicit and policy-driven, likely reflecting fiscal pressure from higher import costs and the need to stabilize domestic supply. Overall, the likely beneficiaries are producers and logistics operators positioned to move barrels through alternative corridors, while import-dependent economies face higher costs and greater volatility. The market implications are direct for crude benchmarks and the trading complex around them. A move toward $150 by September implies a meaningful upside tail risk for Brent- and WTI-linked instruments, with knock-on effects for refining margins, freight rates, and insurance premia for Middle East shipping lanes. The Saudi rerouting trend also signals shifting regional crude flows that can affect differentials between Red Sea-linked grades and those priced off Gulf benchmarks, potentially widening spreads for certain grades and grades destined for Asia. For Pakistan, increasing strategic reserves can support near-term physical availability and reduce the probability of domestic price spikes, but it also implies higher government or quasi-government procurement demand that can tighten regional supply during stress windows. In risk terms, the energy complex looks set for elevated volatility, with the probability-weighted impact skewed toward higher prices rather than a quick normalization. What to watch next is whether Hormuz traffic resumes in a measurable way—such as sustained increases in tanker transits, lower spot freight/insurance costs, and stabilization in prompt-month crude spreads. The Saudi data point that volumes peaked in March and then declined by June suggests that any “temporary” workaround may degrade over time, so monitoring throughput indicators at Yanbu and Red Sea export capacity will be crucial. Pakistan’s cabinet committee approvals to amend the Pakistan Oil Refining Policy 2023 and the Prime Minister’s order to raise strategic reserves should be tracked for implementation speed, procurement volumes, and any changes to refining feedstock sourcing. Trigger points for escalation include renewed disruptions to maritime traffic, further declines in alternative-route throughput, and evidence that physical inventories are not rebuilding fast enough. De-escalation would look like consistent restoration of Hormuz flows, narrowing risk premia, and improved liquidity in front-month contracts.

Geopolitical Implications

• 01

  Chokepoint vulnerability is translating into higher risk premia and more explicit energy-security policy actions in import-dependent states.

• 02

  Saudi Arabia’s rerouting capacity is a strategic lever, but declining throughput suggests limits that can shift bargaining power.

• 03

  Market expectations are being shaped by cross-shock memory from the Russia-Ukraine era, increasing sensitivity to maritime disruptions.

• 04

  Pakistan’s reserve build and refining-policy changes indicate resilience planning that can affect regional procurement and trade flows.

Key Signals

• —Sustained restoration of Hormuz tanker transits and lower shipping/insurance costs.
• —Yanbu throughput and East-West Petroline utilization indicators.
• —Prompt-month crude spreads and volatility in Brent/WTI-linked contracts.
• —Pakistan reserve procurement volumes and refining feedstock sourcing changes.