Hormuz crude flows fall to 8.5 million barrels a day as a container ship sinks

A Singapore-registered container ship, the GFS Pride, sank in the Strait of Hormuz on Wednesday after being struck by an unidentified projectile and catching fire. All 21 crew were evacuated and no injuries were reported, according to the Maritime and Port Authority of Singapore, as reported by CNBC. The authority called the attacks "unprovoked, unjustifiable and a breach of international law."

Iran's Revolutionary Guard said through the Tasnim news agency that the ship hit a naval mine. Maritime security firm Marisks told clients there is no independent evidence of a mine and described the claim as consistent with a psychological operations campaign meant to discourage commercial shipping, per CNBC. We cannot verify either account.

The number behind the number: crude flows have given back the recovery

The ship is the headline. The flow data is the story. Kpler estimates crude exports through Hormuz averaged 8.5 million barrels a day in the week ended October 12, nearly 40% below normal, according to CNBC. Flows from the whole region, including pipelines to the Gulf of Oman and Red Sea, were 14 million barrels a day, nearly 20% below prewar.

That is a sharp reversal. On September 30 we reported Kpler's seven-day average at 13.5 million barrels a day, back to its prewar baseline. Against that figure, 8.5 million is a drop of 5 million barrels a day, or 37%. CNBC says shipments pulled back as attacks increased, after the U.S. military had guided tankers through in September.

Daily flows are volatile. Kpler counted 6 million barrels crossing on Friday and only 3 million on Monday, so any single day is a poor guide.

What 5 million barrels a day is worth

At Brent near $108.80 on our markets board at 12:50 p.m. ET, 5 million barrels a day is about $544 million of crude a day that is not moving through the strait compared with late September. That is an illustration, not a loss figure: some of it is delayed rather than lost, and pipelines have taken part of the load. WTI was near $96.70 at the same time.

Who it actually hits

• Fleet and delivery operators. Diesel is the product most exposed, because refined fuel shipments through the strait were already far below normal. Our earlier report put U.S. on-highway diesel at $6.38 a gallon in the EIA's September 28 survey, $2.63 above a year earlier. A hauler burning 20,000 gallons a year pays about $52,600 more than last year at that gap, before any further move.
• Importers with Asian supply chains. A container ship, rather than a tanker, is a new category of target. More than 20 vessels, mostly oil tankers, have been attacked this month, per UKMTO incident reports cited by CNBC. The International Maritime Organization counts two sailors missing and 12 injured. Insurance cost and routing are the first things an importer sees.
• Energy traders. The escort model that lifted flows in September depends on attacks being deterred. This week's data suggest it is not holding.

What to watch

The next Kpler weekly figure, whether the UKMTO count of attacks keeps rising, and the EIA's weekly diesel survey. Our own markets coverage will track the oil move as it develops.

Sources: CNBC, citing the Maritime and Port Authority of Singapore, Marisks, UKMTO, the International Maritime Organization and Kpler; EIA Gasoline and Diesel Fuel Update via our September 30 report. Prices are intraday and will change. Fuel cost examples are illustrations. This is market information, not investment advice.