TotalEnergies Profits From Hormuz Chaos as Gulf Crude Still Flows

TotalEnergies is quietly turning the Strait of Hormuz crisis into a profit center. The French major buys Iraqi and Qatari crude at $50 to $60 per barrel, then moves it through the strait and sells against a Brent price above $90. The discount on Gulf barrels runs $40 to $50 below Brent — more than enough to cover the roughly $10 per barrel cost of hiring ships for the crossing.

CEO Patrick Pouyanne described the trade at a Norwegian energy conference on Monday. TotalEnergies is probably the largest trader of oil from Iraq or Qatar, he said, and the crude is moving through Hormuz quietly. Not publicly.

The arithmetic explains the discretion. Moving a very large crude carrier through Hormuz and back costs about $20 million, or about $10 per barrel on a 2 million barrel cargo. With Gulf crude priced $40 to $50 below Brent, the margin survives even after shipping costs. So crude still transits the strait — just without fanfare.

Refined products are another story. Pouyanne said not a single tanker of refined products is moving out of Hormuz. The transport surcharge for products runs about $50 per barrel, a price that kills the trade. The result is a market with bearish crude and very bullish products. There is a lack of oil products, he said.

The US-Israeli war with Iran effectively paralyzed the strait through bombing threats. Before the conflict, Hormuz handled roughly a fifth of global oil and LNG supplies. That chokehold has pushed TotalEnergies to invest in bypass pipelines.

One project would run from Baghdad to Syria. Another would double the capacity of the Fujairah pipeline in Abu Dhabi. The existing Abu Dhabi Crude Oil Pipeline can carry up to 1.8 million barrels per day. A parallel $3 billion, 300-kilometer line was already under evaluation as early as 2023, and Kpler reported on the plans in its July report.

The new West-East Pipeline project is 50% complete and targets an early 2027 start, though Kpler considers mid-2027 more realistic. The UAE's Crown Prince directed ADNOC to fast-track construction. Once finished, the project would double UAE bypass capacity to over 3 million barrels per day, carrying offshore grades including Upper Zakum, Das Blend, and Umm Lulu. Fujairah port will need expansion to handle the added flow.

Saudi Arabia has begun preliminary discussions to increase its East-West Pipeline capacity by 1 to 2 million barrels per day. Industry sources told Kpler the expansion is for a parallel products pipeline, not crude. The existing East-West line runs from Abqaiq to Yanbu on the Red Sea and can move up to 7 million barrels per day — but Yanbu export terminals can sustain only 4.5 to 5 million. Debottlenecking the loading infrastructure comes first, making 2028 or later a realistic startup.

The pipeline race carries a clear implication: even if the strait reopens fully, the bypass capacity being built now will permanently change how Gulf crude reaches the market. The economics of moving oil around the world are being re-priced in real time.