Following an interim peace deal between the US and Iran, a significant volume of oil, estimated at around 80 million barrels, is set to be released from the Persian Gulf. This includes approximately 62 million barrels on 31 supertankers and additional volumes on other vessels that were trapped due to the closure of the Strait of Hormuz. The reopening of this crucial waterway will allow this accumulated supply to reach global markets, particularly Asia.
Asian refiners, who had previously scrambled to secure alternative supplies due to the Strait's closure, are now facing a potential oversupply. Traders indicate that the sudden influx of crude could force refiners to store barrels in operational tanks or increase processing rates. This has already begun to impact crude prices, with benchmark Middle Eastern crude forward curves, such as Dubai and Murban, shifting into a bearish contango pattern for the first time since the conflict began. Oman crude is also trading at a discount to its Dubai benchmark, reversing its usual premium.
The initial movement of oil is already underway, with Saudi Arabian tanker giant Bahri's vessels, including the Shaden, Jaham, and Awtad, having exited the Strait of Hormuz. In addition, Kuwait has announced plans to increase its oil output to surpass 2 million barrels per day within a week. The White House has confirmed that oil is flowing, and gasoline prices have fallen below $4 per gallon nationally, while Brent crude briefly touched its lowest price since early March.
