Global oil markets could face fresh downward pressure if the Strait of Hormuz reopens on Friday following the interim US-Iran agreement, potentially releasing millions of barrels of stranded crude into international markets, Reuters reported.
According to Kpler, the reopening could unlock as much as 93 million barrels of non-Iranian crude currently trapped in the Persian Gulf. Some traders estimate around 50 million barrels could hit the market quickly, as part of the volume has already begun moving through alternative routes.
“The reopening of the Hormuz Strait could unleash some 93 million barrels of stranded non-Iranian barrels from the Persian Gulf,” Kpler analyst Muyu Xu said in a June 17 note.
The supply surge comes after Gulf producers increased exports through ship-to-ship transfers off the UAE and Oman, helping push Middle East crude benchmarks into discounts earlier this week.
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A further boost could come from Iran. Kpler estimates that around 72 million barrels of Iranian crude remain stranded on tankers west of Chabahar and could enter the market if Washington eases restrictions under the agreement. Iranian exporters have already begun positioning for higher shipments, with several tankers leaving the strait this week.
Despite the prospect of additional supply, demand from Asia, the world's largest crude-importing region, appears muted. Refiners across the region have largely secured cargoes for June-August deliveries, while refinery maintenance in China is expected to curb near-term crude purchases.
Energy Aspects estimates that more than 1.8 million barrels per day of Chinese refining capacity will be offline in July due to scheduled turnarounds. China's refinery throughput, already near a four-year low in May, is expected to remain under pressure amid subdued fuel demand and the country's accelerating adoption of electric vehicles.
“A large-scale increase in crude buying appears unlikely unless Beijing relaxes restrictions on product exports and/or proceeds with another round of strategic petroleum reserves replenishment,” Xu said.
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Still, refiners are preparing for higher Middle Eastern supply. Kpler expects India's imports of Gulf crude to rise by an additional 400,000-600,000 barrels per day through August as refiners rebalance sourcing strategies.
“Increased supply of Middle Eastern crude oil would deepen contango in regional oil benchmarks,” an Asian trader said, signalling expectations of more comfortable supply conditions in the months ahead.
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