Key facts
- Clean tanker owners are willing to resume direct voyages through the Strait of Hormuz, reducing reliance on costly ship-to-ship transfers.
- Crude oil prices have fallen, with Brent down 10% on the week, as markets anticipate easing disruptions in the Strait of Hormuz.
- Middle Eastern crude benchmarks Dubai and Murban have flipped into contango, suggesting a temporary oversupply.
- Crude transits through the Strait of Hormuz have reached their highest weekly tally since the US-Iran conflict began.
- Iran fired drones at a Taiwanese cargo ship in the Strait of Hormuz, causing damage.
- Saudi Aramco has loaded its first cargoes in the Persian Gulf since the conflict began.
Clean tanker owners are increasingly willing to conduct direct voyages from the Mideast Gulf, signaling a reduced reliance on costly ship-to-ship (STS) transfer arrangements that became prevalent due to conflict. This indicates growing confidence in navigating the Strait of Hormuz, although tanker traffic remains below pre-conflict levels.
Several charterers have recently secured port-to-port fixtures, contrasting with previous bookings that largely involved STS loadings. The LR1 tanker Nautilus was provisionally booked by Saudi Aramco's trading arm for a naphtha voyage from the Mideast Gulf to Japan. An earlier fixture for an MR tanker on a Mideast Gulf to US Gulf route was the first since the conflict began.
Despite renewed activity, clean exports from Mideast Gulf ports remain significantly below pre-conflict levels, with 162,000 b/d in June compared to 1.66 million b/d in February. STS transfers continue to be used, with at least eight ships loading via this method in June.
Oil prices have tumbled as markets anticipate a decrease in disruptions through the Strait of Hormuz. Brent crude is down 10% on the week, and Middle Eastern benchmarks have moved into contango, suggesting a potential easing of tensions and a return to normal shipping operations. Crude transits through the Strait of Hormuz rose to the highest weekly tally since the onset of the US-Iran conflict, with more than 16 million barrels passing through the waterway this Wednesday-Thursday.
However, Iran's IRG fired several drones at the Taiwan-owned Ever Lovely cargo ship, reportedly attempting to cross the Hormuz through 'unauthorized routes', damaging the vessel's bridge. This incident raises fears that Hormuz transit could be choked off again.
In other energy market news, Iraq has considered leaving OPEC if the oil group does not allow Baghdad to significantly increase its crude production quotas, a claim the Iraqi Oil Ministry subsequently denied. Chinese state-controlled refiners such as Sinopec and PetroChina are considering resuming Iranian oil purchases for the first time since 2019. Qatar plans to resume normal operations at its Ras Laffan liquefaction plants within the upcoming weeks.
US President Trump has ordered the Department of Justice to investigate companies’ pricing policies, claiming that American refiners are not dropping their gasoline price at the pump commensurate to oil prices. Differentials for West African grades have collapsed to their lowest on record. Kazakhstan's giant Karachaganak field saw its production curbed by 25% after a Ukrainian drone strike on the Orenburg gas processing plant. Oman joined other members of the Gulf Cooperation Council in a declaration that rejects the imposition of tolls in the Strait of Hormuz. Saudi Arabia's national oil company Saudi Aramco has loaded its first two cargoes in the Persian Gulf since the start of the US-Iran conflict.
Russian Deputy Prime Minister Alexander Novak stated that Moscow is considering a ban on the export of diesel for fuel producers for several months, as Ukraine drone strikes on Russian refineries curbed product supply. Gold prices are on track to mark their 5th straight weekly loss, with spot gold trading around $4,025 per ounce on Friday, as a stronger-than-expected dollar and expectations of US interest rate hikes coming as soon as September weighed on sentiment.