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A debate is brewing in the oil market: Is the Strait of Hormuz way more “open” than we thought?

Common wisdom held that the crucial waterway is effectively closed to oil tanker traffic. Iran has fired on dozens of tankers attempting to transit the strait. Maritime tracking services using a combination of transponder data and satellite imagery have reported a significant decline in the number of vessels trying to navigate the waters. Global oil inventories continue to be depleted.

But US Energy Secretary Chris Wright told a very different story last week: The strait is open, and oil is flowing significantly faster than the market appreciates.

He would know: The US military is right there, patrolling the water, escorting ships in and out of the strait, protecting them from enemy fire. The Navy provides the Department of Energy with detailed information about which vessels are moving through and when.

“In coordination with the US military, the US Department of Energy maintains the best available data related to oil and oil products leaving the Arabian gulf,” a DOE spokesperson said.

It’s not unlike the Trump administration to jawbone oil prices lower. President Donald Trump has repeatedly said the United States controls the Strait of Hormuz and frequently claims that a deal with Iran is imminent. Secretary Wright has said the United States is ensuring plenty of oil is getting where it needs to go.

Ignoring the bluster, Wall Street analysts have largely relied instead on the third-party tracking data they’ve been receiving, along with industry-reported inventory measurements and other data.

But that might be changing. Or, at least, for the first time since the start of the war, some analysts on Wall Street might at least be willing to consider that the administration may be telling the truth about the state of the oil market.

Confusion reigns

Wright asserted that the seven-day average of oil flowing out of the Strait of Hormuz had increased to 9 million barrels per day. Hussain noted that stood in direct opposition to Iran’s claim that the strait was closed – and ship-tracking data that showed it was about half Wright’s number.

“It is becoming increasingly difficult to know how much oil is leaving the Gulf,” said Hamad Hussain, senior climate and commodities economist at Capital Economics. “Contrasting claims by US and Iranian officials are muddying the waters.”

Wall Street analysts – who use ship tracking services like Kpler and Windward Intelligence, among many other data points, to provide estimates about oil flows – have said oil tankers have been getting roughly 4 million barrels of oil out of the Persian Gulf each day.

In addition to the roughly 7 million barrels per day that Middle Eastern countries have rerouted around the strait through pipelines and other methods, about 11 or 12 million barrels have been flowing out, according to the tracking services. That’s significantly lower than the 20 million barrels per day that the region had exported before the Iran war started.

Wright said that on August 8, total oil coming out of the Gulf exceeded that 20-million-barrel mark.

Kpler defended its data, which is powered by its network of 13,000 owned-and-operated receivers across 190 countries that track 350,000 vessels, updating their location every 5 minutes. It also owns a fleet of low-earth-orbit satellites.

“It is not possible to reconcile the disparity between what we see and what he is quoting,” said Matt Smith, director of commodity research at Kpler.

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