Last week, President Donald Trump said a secret US operation moved 100 million barrels of oil through the Strait of Hormuz while it was blocked. The claim came in an industry already used to the question of how much oil is actually leaking—and no one, it turns out, can answer that with confidence.
“No one has ever experienced this kind of disruption,” said Matt Stanley, chief commercial officer at Kpler, a cargo intelligence and ship tracking company. The reason the numbers are so hard to pin down is what the industry calls the dark trade—vessels running without AIS transponders, sailing at night, near the Omani border, sometimes with naval escort.
There are ways to identify parts of the leaking oil though. Different grades of crude can only come from certain sectors. UAE’s Murban crude can be shipped through Fujairah, without border. Another impure type, Upper Zakum, cannot. One oil market analyst noted that their team has seen Upper Zakum crude oil from other markets. What is observed is happening, however the rate is still unknown.
Stanley says 100 million barrels may have passed through the Strait of Hormuz since early May. “If you put it in context, before the conflict, it was 20 million barrels a day that was going through, so five days’ worth of oil, in a normal traffic environment, and it takes more than a month. 100 million barrels, it’s a good number, but it’s a drop in the ocean, literally, compared to the previous traffic.”
Why haven’t prices exploded yet
The world’s most important oil chokepoint has been successfully closed for more than 100 days. Data from the World Trade Organization shows a 95 percent drop in crude oil shipments from Arabian Gulf ports and a 99 percent drop in liquefied natural gas carriers. The International Energy Agency called it “the largest supply disruption in the history of the global oil market.” However, Brent crude is sitting at $87.55 per barrel—the lowest price since before the conflict began.
This is because of buffers. China has about 1.3 billion barrels in reserves, drawing it down to about a million barrels a day, Stanley said. “We see that they are looking for about 7 million barrels per day from May, June and July. They were buying 12.5 million barrels per day in December.” The US, Brazil, and Canada also stepped in to fill part of the gap.
Three analysts interviewed agree that the oil market’s response has been strong. “The oil market reacted to this cut significantly in terms of cutting parts of the demand,” said Iman Nasseri, managing director, Middle East of FGE NexantECA, a chemical and chemical consulting company. “There is a large amount of stock that has come to the market, but we doubt that they will continue to do so, we expect July to be July.” [if the strait remains closed]things will change.”
Buffers will run out. One analyst said stocks are approaching what the industry calls critical levels for operations—where oil reserves and additional supplies need to be replenished. They added that the US, currently operating as a swing producer, is facing its deadline as the end of the year approaches, and the US will have to prioritize its domestic production to accommodate people who need to heat their homes.
“People who are looking at October, you really think it’s going to be fixed by mid-August,” said Stanley. “That’s what I think the market expects.”
Get back online
Global oil supply fell by 10.1 million barrels per day in March, while OPEC+ production fell by 9.4 million barrels per day month-on-month. The hard question is how much returns, and when.
S&P Global CERA analysis estimates resumption timeframes of 10 weeks to seven months for fields closed for two months. IEA executive director Fatih Birol said more than 80 power plants were damaged, and recovery “could take two years.” The national oil company of the UAE estimates that the full flow of Hormuz will not start again until 2027.
