An estimated 31 supertankers, carrying approximately 62 million barrels of crude oil, are poised to exit the Persian Gulf and head to Asia now that the Strait of Hormuz has reopened. This follows an interim deal signed by the US and Iran. The oil is expected to reach India in about one week and East Asia in approximately three weeks. This sudden surge in supply comes at a time when Asian refiners are already well-supplied for June and July, having secured alternative sources to compensate for previous disruptions in Middle Eastern flows. Some tankers had even turned off their satellite transponders, suggesting the actual number of vessels could be higher.
The impending flood of crude has already impacted oil prices, with the forward curve for benchmark Middle Eastern crude oils like Dubai and Murban shifting into a bearish contango pattern for the first time since the war began. Oman crude is now trading at a discount to its underlying Dubai benchmark, a reversal from its usual premium. Additionally, at least one diesel cargo traded at a discount to its benchmark this week, contrasting with previous premiums. Traders report that some refiners, including at least one South Korean refiner, are offering larger-than-usual amounts of distillate fuels like diesel and jet fuel, trying to offload supply before prices tank further.
To manage the anticipated oversupply, Asian refiners are considering either placing the incoming crude into operational storage tanks or increasing their processing rates. Prior to the strait's reopening, countries like China had largely stayed out of the market, and Japan had relied on local storage. Simultaneously, major Persian Gulf sellers such as Abu Dhabi National Oil and Kuwait Petroleum had been actively marketing their supply, with some barrels already moving out of Hormuz. Iraq's oil production has also seen a significant jump and is expected to continue increasing, adding to the regional supply. Three supertankers controlled by Bahri, Saudi Arabia’s national shipping company, were observed in the Gulf of Oman on June $18, after being last seen inside the Persian Gulf about two months prior, indicating early movements.
