Key Insights
- Over 90 million barrels of non-Iranian crude are still locked up throughout the Gulf region.
- Asian refiners have already secured near-term supplies, limiting immediate buying demand.
- Major banks have lowered oil price forecasts as shipping through the route resumes.
Strait of Hormuz reopening plans are raising expectations of a sharp increase in crude supply as millions of barrels stranded across the Persian Gulf prepare to enter global markets. Traders and analysts expect the additional flows to pressure Middle Eastern crude prices while reshaping buying patterns across Asia.
The anticipated reopening follows a 14-point interim agreement signed digitally on Wednesday by U.S. President Donald Trump and Iranian President Masoud Pezeshkian. Iran’s foreign ministry said the agreement took effect immediately, paving the way for shipping traffic to resume through one of the world’s most important energy corridors.
Before hostilities disrupted traffic in late February, the Strait of Hormuz handled roughly one-fifth of global oil and liquefied natural gas shipments. The reopening could now unlock a large backlog of crude that accumulated during months of restricted access.
Backlogged crude prepares to reach global buyers
Market intelligence firm Kpler estimates that about 93 million barrels of non-Iranian crude remain stranded across the Gulf region. Analyst Muyu Xu said producers continued moving oil through alternative routes, including ship-to-ship transfers near the United Arab Emirates and Oman.
Those exports increased this month and contributed to weaker spot pricing for regional crude grades. Once normal transit resumes, delayed cargoes are expected to move toward customers worldwide.
Kpler also estimates that around 72 million barrels of Iranian crude remain stored aboard tankers west of Chabahar. The volume could increase further if Washington eases restrictions on Iranian oil exports.
Iran has already begun positioning for higher exports. Three Iranian tankers reportedly passed through the Strait of Hormuz this week as preparations accelerated.
Another estimate from Vortexa showed 54 very large crude carriers in the Persian Gulf during mid-May. Those vessels were carrying as much as 87 million barrels of oil.
Metric Estimate
Non-Iranian crude stranded in Gulf: 93 million barrels
Iranian crude on tankers: 72 million barrels
Oil carried by 54 VLCCs: Up to 87 million barrels
Additional Indian imports expected: 400,000 to 600,000 bpd
Tankers trapped in Gulf: 118 vessels
Asian refiners weigh supply against weak demand
Despite expectations of higher supply, many Asian refiners appear in no hurry to secure additional cargoes. Several companies already booked deliveries scheduled for June, July, and August.
Chinese refiners are also entering a maintenance period. Energy Aspects estimates that more than 1.8 million barrels per day of refining capacity will be offline in July. Private refiners account for nearly 1.2 million barrels per day of that figure.
China’s processing rates fell near a four-year low in May. Throughput may decline further this month before recovering in July as state-owned refiners increase operations.
Several Chinese buyers paused spot purchases this week while monitoring developments surrounding the agreement and the reopening timetable.
Fuel demand remains under pressure despite improved refining margins. Rapid adoption of electric vehicles continues to reduce transportation fuel consumption across China.
Meanwhile, Taiwan’s state-owned refiner CPC said it could increase purchases of heavier and higher-sulfur crude grades. The company plans to use those supplies for bitumen and sulfur production.
Market outlook shifts as shipping routes normalize
The return of Gulf supplies could reduce Asian demand for crude from the Americas. Indian refiners are also expected to increase purchases under existing long-term agreements with Middle Eastern producers.
Kpler forecasts that India’s imports of Gulf crude could rise by 400,000 to 600,000 barrels per day through August as refiners adjust their feedstock mix.
On Monday, Kpler estimated that 118 tankers remained trapped in the Persian Gulf. Analysts expect the queue to take between 10 and 15 days to clear. Early traffic increases will largely reflect delayed departures rather than a permanent rise in shipping capacity.
Oil and LNG carriers are expected to receive priority access because of their importance to global energy markets.
The prospect of additional supply has already altered market expectations.
- Goldman Sachs lowered its fourth-quarter 2026 Brent forecast to $80 per barrel from $90.
- The bank reduced its 2027 average Brent forecast to $75 per barrel.
- Analysts expect tanker flows through the Strait of Hormuz to recover steadily over coming weeks.
Conclusion
The opening of the Strait of Hormuz indicates a possible relaunch of global crude flows, with the first arrivals of stranded Gulf barrels in international markets. A projected 60 M+ barrels of release may further increase the supply pressure near-term, particularly in Asia.
Market direction will now be based on the rate at which shipments of the product are getting out of the backlog and whether the demand for the product can take up the extra volume. Prices are expected to continue to be very sensitive as the Strait of Hormuz reopens for full transit and shipping levels return to normal.
