Key facts
- Non-Iranian oil traffic through the Strait of Hormuz has rebounded, with estimates suggesting 5-6 million barrels per day are moving.
- U.S. military assistance is aiding the flow of approximately 7 million barrels daily out of the Persian Gulf.
- Initial fears of a major crisis and forecasts of $200 per barrel oil have not materialized due to these workarounds.
- World oil stocks are dwindling, increasing the risk of renewed price spikes.
- U.S. inventories are approaching a 'danger zone' level.
Despite initial fears of a severe oil supply crisis following Iran's threats to close the Strait of Hormuz, market analysis and shipping data indicate that lost crude supply is significantly smaller than initially calculated. Approximately 7 million barrels of oil per day are reportedly moving out of the Persian Gulf with U.S. military assistance, a figure higher than many in the industry had anticipated.
Initial calculations, based on the total non-Iranian Gulf crude oil exports of 12 to 15 million barrels per day, suggested a catastrophic supply disruption. This led benchmark Brent crude futures to surge to nearly $120 per barrel in March, with forecasts predicting prices could reach $200. However, evidence has emerged of tankers escaping the strait, some spotted by ship-tracking firms and others operating with spoofed locations or turned-off satellite systems.
Shipping data firm Kpler estimated that about 1.9 million barrels per day of non-Iranian crude moved through Hormuz and Gulf of Oman export channels between April 1 and June 10. This volume has been bolstered by alternative logistics, including large crude exports from Iraq, Kuwait, and the UAE, and Saudi Arabia's continued shipments from its Red Sea port. The International Energy Agency estimated a 14 million barrel per day drop in Gulf supply, but sources at major trading companies suggest the actual shortfall is closer to 5 to 6 million barrels per day, or even 2 million barrels when factoring in reduced Chinese demand.
External factors such as increased U.S. oil exports, a record 400-million-barrel release from international emergency stocks, and subdued Chinese demand have also contributed to cooling the oil market, pushing prices below $90 per barrel. Analysts note that commercial oil markets appear sufficiently supplied for now due to these adaptations.
However, the world's oil stocks are dwindling, with U.S. inventories approaching a 'danger zone' level. Stockpiles in major economies are heading toward their lowest levels since at least 2003, increasing the risk of renewed price spikes if logistical bottlenecks or supply disruptions occur.