West Asian crude oil markets could come under further pressure if the
Strait of Hormuz reopens on Friday following the US-Iran
interim deal, releasing millions of barrels of oil stranded in
the Middle East Gulf into global markets, industry executives
said.
The wave of supply comes after Gulf producers ramped up exports
via ship-to-ship transfers off the United Arab Emirates and Oman
this month, which depressed spot differentials for Middle East
crude to discounts on Tuesday.
“The reopening of the Hormuz Strait could unleash some 93
million barrels of stranded non-Iranian barrels from the Persian
Gulf, while producers are expected to continue supplying cargoes
through less visible channels,” Kpler analyst Muyu Xu said in a
June 17 note. Some traders estimated that about 50 million
barrels are set to be released as some cargoes had already been
shipped out.
In addition, the lifting of US restrictions on Iranian crude
could also release some 72 million barrels stranded on tankers
west of Chabahar, with volumes set to rise further if Washington
grants broader sanctions relief, Kpler said.
Iran’s fleet has been gearing up to boost exports with three of
its tankers this week exiting the strait, which carried about a
fifth of the world’s oil and liquefied natural gas shipments
before the US and Israel attacked Iran on February 28.
US President Donald Trump and Iranian President Masoud
Pezeshkian digitally signed the 14-point agreement to end the
war on Wednesday, U.S. and Iran officials said. Iran’s foreign
ministry said the agreement was already in effect.
ASIAN BUYERS COMMITTED TO SUPPLY ARRIVING JUNE TO AUGUST
While supply is set to surge, most Asian refiners have already
booked crude cargoes to arrive in June to August and several
refineries in China are scheduled to shut for maintenance,
refining and trade sources said, reducing demand for immediate
supplies.
Consultancy Energy Aspects tracked more than 1.8 million bpd
of Chinese refining capacity that will be shut for turnarounds
in July, including nearly 1.2 million bpd at private firms.
China’s throughput, already at a near four-year low in May, is
expected to slide further to about 12.4 million bpd this month,
before recovering above 13 million bpd in July with state-owned
refiners raising runs, it added.
Many Chinese refiners paused spot buying this week as they eyed
the reopening of the strait and details of the agreement.
Although weaker crude prices improved refinery economics and
narrowed losses, fuel demand in China is expected to stay
subdued as a result of the country’s rapid 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,” said Kpler’s Xu.
Some Middle Eastern crude suppliers offered cargoes to
independent refiners in eastern Shandong province, two sources
said, but at prices higher than sanctioned oil from Iran and
Russia.
Crude sellers will need to cut prices further to attract demand
once the strait opens, given that some of them, including
TotalEnergies, still have unsold cargoes, said one
Singapore-based trader. The sources declined to be named as they
were not authorised to speak to the media.
“Refiners are expecting profitability to be quite poor in
the second half of the year,” a South Korean industry official
said.
“So rather than it being a matter of securing a specific
crude, this is becoming a fight over economics,” he added.
ASIA OIL DEMAND SHIFTING BACK TO MIDEAST
Still, refiners are preparing for the eventual rise in
Middle Eastern supply, which is expected to cool Asia’s demand
for oil from the Americas.
Taiwanese state refiner CPC said it was ready to import heavier
grades with a higher sulphur content, to produce more bitumen
and sulphur to meet domestic demand if the strait reopens.
Some Middle Eastern oil producers have asked Indian refiners to
consider buying the committed supplies under their term deals,
which would reduce their purchase of oil via spot tenders,
sources at three refiners said.
Kpler expects a gradual recovery in Indian demand for Gulf
oil to potentially support an additional 400,000 bpd to 600,000
bpd of Middle Eastern imports through August as refiners
rebalance their crude slate.
“Increased supply of Middle Eastern crude oil would deepen
contango in regional oil benchmarks,” an Asian trader said.
Benchmark Dubai’s premium to swaps returned to positive
territory on Wednesday after slipping into a discount of 46
cents on Tuesday, Reuters’ data showed.
In a contango market, prompt prices are lower than those in
future months indicating comfortable supplies.
Published on June 18, 2026
