Crude oil exports transiting the Strait of Hormuz have largely rebounded to pre-conflict levels, according to recent data, though the recovery is masking a significant shortfall in refined fuel supplies that continues to strain global markets.
Data from Kpler, released on Wednesday, indicates that crude passing through the strategic waterway reached a seven-day average of 13.5 million barrels per day as of Monday. This figure aligns with prewar baselines, driven by increased U.S. military escorts and the redirection of pipeline flows. However, Matt Smith, Kpler’s director of commodity research, noted that while Tehran has repeatedly declared the strait closed and claimed control over it, its influence is waning as heavy volumes continue to flow.
The broader Middle East region, encompassing the Persian Gulf and Red Sea, saw crude shipments hit an average of 19.5 million barrels per day, surpassing the prewar baseline of approximately 17 million bpd. Despite these robust crude numbers, the market remains imbalanced.
“The crude market has largely normalized even as refined product supplies remain constrained,” said Natasha Kaneva, head of global commodities strategy at JPMorgan. Refined product shipments through Hormuz averaged just 677,000 barrels per day recently, a sharp decline from the 3.6 million bpd recorded before the war.
This disparity is exacerbating a global fuel crisis. With Middle East supplies limited and Ukrainian strikes impacting Russian refineries, diesel prices in the United States have climbed to record highs. Francisco Blanch, head of global commodities at Bank of America, identified the diesel market as “the biggest source of pain” during a September interview.
The economic pressure has reached Washington, where President Donald Trump is weighing an export ban amid political demands from Republican lawmakers ahead of midterm elections. Meanwhile, Iran’s own crude exports have collapsed under the weight of U.S. Navy blockades, a strategy intended to force a settlement by cutting off Tehran’s primary revenue stream.
Treasury Secretary Scott Bessent stated on Sunday that Iran is approaching the end of its ability to trade, predicting final crude deliveries to China within two weeks. However, experts remain divided on whether economic strangulation will alter Iranian policy. Helima Croft of RBC Capital Markets observed that Iran’s negotiating stance has not shifted, while Scott Modell of Rapidan Energy argued there is no hard evidence that U.S. pressure will fundamentally change Tehran’s position.
Iran recently proposed reopening the strait in seven days if the U.S. reinstates a failed memorandum of understanding from June, which had outlined a pathway for lifting the blockade and establishing a new administrative system for Hormuz. That agreement collapsed into renewed fighting over the summer, and President Trump has rejected the latest offer.
Iran’s offer to reopen Hormuz in seven days sounds like a bluff. Trump rejected it last time—does he think the circumstances have actually changed?
U.S. escorts are keeping crude moving, but who fixes the refined fuel shortage? Sending warships won’t fill the gas tanks in Tokyo or Berlin.
677k refined barrels per day versus 3.6 million prewar? That’s a massive gap. No wonder diesel is the ‘biggest source of pain’ globally.
Bessent claiming Iran’s trade ends in two weeks feels like pressure tactics. Tehran hasn’t blinked at worse sanctions before; why would this be different?
Is the US really considering banning diesel exports while our own pump prices hit record highs? That seems politically suicidal right before midterms.
Strange paradox. Crude flows fine, but gasoline prices keep spiking? The system is clearly broken somewhere down the line.