Gulf producers are still moving crude through the Israel-Iran war, but the operational bill is climbing.

The 12-day conflict that opened with Israeli strikes on Iranian nuclear and military sites on June 13 forced exporters, refiners, and shipowners to reroute cargoes, reprice insurance, and hedge against a possible closure of the Strait of Hormuz. Roughly one-fifth of the world's oil supply transits the waterway, and about a quarter of global LNG trade rides the same channel.

So far, the barrels keep moving. Freight rates spiked when the fighting started, then eased after US strikes on Iranian nuclear facilities on June 22 and Iran's retaliatory attack on the Al Udeid base in Qatar. By early July, tanker rates had fallen back near pre-war levels.

The costs, though, have not disappeared. War-risk insurance premiums for Gulf shipments jumped roughly tenfold at the height of the fighting, from about 0.125% of a ship's value to around 1%. A tanker carrying 2 million barrels of crude faced an extra $1 million to $2 million per voyage.

Some owners responded by routing vessels around the Cape of Good Hope instead of through the Red Sea, adding 10 to 14 days and sharply higher bunker bills. Others kept Gulf sailings but demanded premium rates.

Onshore, the picture is mixed. Qatar has rerouted some LNG cargoes through the Fujairah terminal in the UAE, which lies outside Hormuz on the Gulf of Oman. Analysts at Eurasia Group expect Qatar to keep shipments flowing even if the strait closes, though at higher cost.

Saudi Arabia and the UAE carry spare pipeline capacity around the strait. The East-West pipeline can move about 5 million bpd from Red Sea terminals, and the Abu Dhabi Crude Oil Pipeline to Fujairah adds another 1.5 million bpd.

The war has also scrambled regional fuel logistics. Egypt's SUMED pipeline, which runs from the Red Sea to the Mediterranean, has seen increased demand for transshipment as owners avoid the Red Sea. The Suez Canal and SUMED together handled about 12% of global trade before the Houthi attacks began.

In Israel, the Bazan refinery in Haifa, which processes about 9.8 million tons of crude a year, shut down after a missile strike on the area. Bazan said it would take a $60 million to $70 million hit in the second quarter.

For OPEC+, the conflict has complicated an already delicate production picture. The cartel is unwinding 2.2 million bpd of voluntary cuts while holding 1.65 million bpd of mandated cuts in reserve. Saudi Arabia has signaled it wants to keep its full 3 million bpd of spare capacity ready in case of a major disruption.

The war has also raised new questions about the durability of Gulf security arrangements. Iran fired missiles at the Al Udeid base in Qatar, which hosts about 10,000 US troops, after the US struck Iranian nuclear sites. Qatar called the attack a violation of its sovereignty.

"The US is going to have to decide whether it wants to continue to underwrite Gulf security," said David Des Roches of the Near East South Asia Center for Strategic Studies.

For now, the market has settled into an uneasy equilibrium. Brent crude traded near $67/bbl in early July, down from a peak above $81 during the fighting. Traders are watching for signs that the ceasefire will hold.

"The market has priced in the risk, but the risk is still there," said Amrita Sen of Energy Aspects.

The watch items are clear: whether the ceasefire holds, whether war-risk premiums stay elevated, and whether OPEC+ accelerates its production increases at its next meeting.