A temporary surge in Gulf crude exports during early July masked a deeper vulnerability: renewed hostilities around the Strait of Hormuz are now choking the world's most vital oil shipping lane. Data from Kpler and Vortexa show a sharp 16% jump in daily shipments from five major producers, yet the rebound appears fragile as military strikes escalate and tanker traffic plummets. Main Developments Crude and condensate exports from Saudi Arabia, the UAE, Iraq, Kuwait, and Iran averaged 12 million barrels per day (bpd) in the first half of July, according to Kpler—a significant rise from June's daily average. Vortexa estimated even higher volumes at 13.06 million bpd during the same period. Saudi Arabia, Iran, and Iraq led the increase, while Vortexa noted Iraq posted the largest month-on-month gain and UAE exports eased from record June levels. Yet the upward trend is reversing. Shipments through the Strait of Hormuz dropped to just three commodity tankers on Thursday—the fewest daily transits since May—as strikes by both sides re-escalated. “We’re seeing a slowdown in activity, which means that countries will have to reduce output, which decreases the amount of crude that will be shipped,” said Kpler analyst Johannes Rauball. Read also: Euromoney Names HBL Pakistan's Best Bank for 2026 Background The surge in exports followed a mid-June interim deal between the U.S. and Iran to reopen the Strait of Hormuz and pursue a broader settlement to end their war. That accord unraveled in early July over disagreements about the waterway’s administration. Even with the July rebound, exports remained about 32% below February’s pre-war peak of 17.6 million bpd. Iran has instructed Yemen’s Houthis to be prepared to disrupt Red Sea traffic if the U.S. targets Iranian energy infrastructure, sources told Reuters. Why It Matters The Strait of Hormuz handles a significant portion of global oil and gas shipments, making any disruption a flashpoint for energy markets. The brief export boost earlier this month temporarily eased supply worries and helped lower oil prices, but the renewed decline in tanker traffic threatens to tighten supply again. Saudi Arabia has already diverted most of its energy exports through its Red Sea port of Yanbu—so far in July, 75% of its 5.29 million bpd crude and condensate were exported from there, according to Kpler data. What's Next With the interim deal collapsed and hostilities escalating, the coming weeks will test whether Gulf producers can sustain output levels amid shrinking shipping capacity. The Houthi threat to Red Sea traffic adds another layer of risk, potentially forcing more diversions or production cuts. Markets will watch for any new diplomatic efforts or further military actions that could either restore or further disrupt flows through the Strait of Hormuz.