Middle East maritime blockades disrupt global oil supplies

Maritime disruptions in the Middle East are significantly impacting global oil flows. Following a U.S. maritime blockade of Iranian ports initiated on July 13, Iranian oil exports have been severely curtailed. Kpler data indicates that at least 41 million barrels of crude oil and 22 empty tankers are currently trapped in the Persian Gulf, with minimal new vessels able to transit the Strait of Hormuz.

This blockade has created a supply crisis for Chinese ‘teapot’ refineries, which account for approximately one-fifth of China's refining capacity. The availability of Iranian light crude has shifted from a discount to a premium of up to $3.50 per barrel over ICE Brent. Analysts warn that these refineries may face a near-total lack of new Iranian supply starting in late September, potentially forcing them to reduce operating rates or pivot to crude from Brazil, Iraq, or Russia.

Simultaneously, Saudi Arabia is adjusting its export strategies due to Houthi rebel blockades at the Port of Yanbu in the Red Sea. Saudi Aramco has resumed crude loading at the Ras Tanura and Juaymah terminals after a three-week stagnation. To mitigate risks, Saudi Arabia is increasingly utilizing ship-to-ship transfers in waters off Oman to bypass direct Strait of Hormuz transit risks, though this method faces challenges regarding increased shipping distances and costs.