Who Counts the Oil at Hormuz

The single most consequential number in the world's oil market right now is one on which the two groups best placed to know it cannot agree. Chris Wright, America's energy secretary, insists that almost nine million barrels a day are flowing out of the Strait of Hormuz under the protection of the navy, and that 15 million barrels crossed on a single recent Tuesday. The private firms whose whole trade is counting ships see a different world: one tracker put exports through the strait at 2.8m barrels a day in late July and 1.7m a week later; others guess between two million and six million. This is not a rounding error. It is a disagreement of several million barrels a day, larger than Iraq's entire output, sitting exactly where investors decide what a barrel is worth.

The number matters because the waterway is the world's most dangerous energy bottleneck. Before the war the strait carried about 20m barrels a day of crude and products — a fifth of global fuel consumption and a quarter of seaborne oil trade, most of it bound for Asia. Closure makes the market move in jerks. When a truce took hold in mid-June, Brent eased to around $72; when its expiry undid the deal on August 17th, the price jumped back above $90, not far below the war-time peak of more than $180 hit in late April. Whether the strategic waterway is "open for business," as the White House puts it, is therefore not a diplomatic nicety. It is the load-bearing assumption inside nearly every energy price.

The stand-off between ministers and trackers is usually presented as truth versus spin. It is better read as a contest of incentives. The administration has every reason to see an open strait: open water keeps prices and inflation down, reassures the Asian governments that buy most of the oil, and lets Washington claim the war is proceeding well. The trackers have the opposite motive wearing the same clothes. Their subscribers pay for the accurate tally, including the barrels deliberately hidden; their credibility rests on refusing to be told what to see. So one side is rewarded for good news, the other for exactness, and neither has any reason to converge.

The honest complication is that both are partly blind. Tankers switch off their Automatic Identification System transponders before crossing, forcing analysts to work from satellite snapshots that cannot see at night, cannot reliably tell a full hull from an empty one, and cannot follow cargo moved from ship to ship. The navy, with radar, aircraft and direct contact with vessels, genuinely does observe things the trackers cannot. It is entirely possible that the strait is moving more oil than the gloomiest count suggests. What is not possible is that it is moving the nine million barrels a day the government insists on.

The test is that oil leaving Hormuz does not evaporate; it must arrive. On the arrival ledger the official version falls apart. Middle Eastern crude reaching Asian ports has run far below its pre-war pace — about 11m barrels a day recently against 16m before the conflict, a shortfall of more than four million even after the ceasefire let trapped cargo out. Loading figures from the Gulf corroborate the shortfall: Iraq shipped only about a third of its pre-war volumes in August, Kuwait about a fifth. Dark ships can hide a couple of million barrels. They cannot hide barrels that simply never show up at the dock.

The useful conclusion is not that the government lies and the trackers tell the truth. It is that the price of oil is being set against an unknown no one can fully resolve, and that the two independent cross-checks — cargoes loaded and cargoes landed — both line up against the rosier official count. For an investor that asymmetry deserves respect. Were the "open for business" story real, it would justify the comfort that pushed Brent back toward $70. The physical evidence, meanwhile, has the market paying north of $85 for a strait that in any measurable sense is running well short of normal.

This is not a warning of an imminent spike, still less a licence to chase energy stocks. The conflict could resolve and collapse the premium as quickly as it created it, and scarcity in commodities is routinely over-extrapolated. The point is epistemic. When an official figure for a strategic waterway is asserted without its supporting ledger — no vessel names, no cargoes, no ports — and the independent count is roughly half of it, the prudent reading is that supply is tighter than the comfortable story allows, and that the truth will announce itself through the next two months of arrival data, not through any press release. Until it does, every energy position bought on the promise of an open strait rests on an assumption that no one, including the people asserting it, can actually verify.