Roughly 43% of Middle East Gulf (MEG) crude cargoes loaded in September bypassed ship-to-ship (STS) transfers in the Gulf of Oman (GoO), up from 30% in July and 27% in August, according to Kpler voyage tracking. Iraq leads the rerouting, Saudi Arabia is following, and the VLCC pool now transiting the Strait of Hormuz (SoH) on direct voyages has grown enough to lift the structural freight floor for regional exports.

What is driving the bypass of GoO hubs?

Post-MoU MEG loadings have outgrown the regional STS network. The collapse of the Strait of Hormuz Memorandum of Understanding on June 17 forced owners to reassess exposure. As loadings scaled again, GoO STS slots became the binding constraint. The shuttle-style fleet has reached at least 63 VLCCs, supporting a crude and condensate export shipping capacity of roughly 7.6 Mbd per month at current turnaround times.

In July, 0.7 Mbd of post-MoU cargoes — 30% of loaded barrels — skipped a GoO STS. The share climbed above 1.0 Mbd in August (27% of a larger total) and stands at 0.5 Mbd so far in September. With 82% of the running month's barrels still in transit, the September figure is subject to heavy revision, but the direction is clear. As the underlying analysis frames it: "This diversification is not an expectation but rather an observed reality."

How is Iraq reshaping its trade flows?

Iraq accounts for the bulk of bypass volumes across July and August. The pattern splits by destination:

• Short-haul routes, notably to India's West Coast, run on direct voyages that add roughly four days to a round trip versus a GoO shuttle.
• East-of-Malacca volumes — including those bound for China — increasingly lift via Malaysian-waters STS, a long-distance alternative hub that adds ballast distance but preserves SoH exposure management.

Sinokor-linked tonnage holds the largest share of the VLCC pool serving Iraqi direct trades.

Where does Saudi Arabia fit?

Saudi loadings, scaled by the recent eastward redirection of exports, also tilt toward direct voyages on long-haul lanes. Minimal residual STS activity in the West Coast of India and Malaysia is attributed to Qatari barrels rather than Saudi ones. The kingdom's national fleet has captured a significant share of the direct-voyage program, while at least five dedicated shuttle VLCCs have recently switched to direct employment — a sign that the shuttle model's dominance is fading.

What does the shift mean for freight and risk?

Longer voyages require more hulls to clear the same barrel volume through the SoH. The larger the exposed VLCC pool, the heavier the risk premium freight rates must carry. The Kpler analysis concludes freight rates appear to have peaked for now but remain elevated, broadly consistent with the lengthening of regional trading routes. Periodic flare-ups in regional hostilities keep the door open to sharper upside spikes.

Will the Yanbu pipeline restart change the calculus?

The gradual resumption of the East–West Pipeline and higher Yanbu loadings cuts two ways:

• If Yanbu volumes substitute for MEG loadings, barrels migrate toward a lower-risk export point, easing the risk premium embedded in VLCC freight.
• If the producer keeps or grows loadings at both export points, Yanbu adds incremental tonne-mile demand on top of still-elevated SoH exposure, reinforcing support for freight rates.

Either way, the GoO shuttle trade is no longer the default for MEG crude. Diversification has moved from forecast to operating reality in the regional tanker market.