Hormuz 'isn't really the problem'

A significant disruption is unfolding in the worldwide oil trade, potentially leading to another price surge, particularly in Asia within the coming weeks. Due to reduced tanker traffic in the Persian Gulf over the last six months, increased exports from other nations, particularly the US, have managed to keep prices relatively steady.

During a brief ceasefire in June, there was also a surge in shipments from the Gulf region. However, the tankers that emerged at that time, including those from Iran, are now reaching Asian ports. According to recent data from market intelligence firm Vortexa, the volume of crude "on water" or in a tanker is decreasing faster over the past two weeks than at any point during the war.

Despite the US Navy's efforts to transport oil along the Omani coast, Vortexa's chief economist, David Wech, states that "Hormuz is currently not really the problem." The exports from key suppliers like Russia, Iran, and Saudi Arabia have dropped dramatically due to Ukrainian drone attacks, a US blockade, and Houthi attacks in the Red Sea, respectively.

For the US, the essential wartime swing supplier, the issue lies in politics and economics. The previously authorized Strategic Petroleum Reserve release has been exhausted, with little interest from the Trump administration in releasing more. Record-breaking profit margins for fuel refineries have kept crude in the country, a trend that will be amplified by the administration's recent call for even higher refinery runs.

Consequently, the global market remains undersupplied by at least 4 million barrels per day. Meanwhile, refineries in China are ramping up production, but very little seaborne oil is currently moving to Asia. This situation is expected to require more crude to be drawn from storage next month, potentially driving prices even higher.