The ongoing conflict in Iran has led to a significant decline in global oil demand, with many buyers hesitant to purchase crude from the region. According to maritime intelligence firm Kpler, more than 200 million barrels of oil have been released from the Strait of Hormuz in the past month, but buyers have been scarce. Qatar Energy and the UAE's Adnoc have had to discount their oil by $6 to $9 per barrel to attract Southeast Asian buyers.
Key Details
Despite a temporary sanctions waiver from the United States, Iran has struggled to sell its oil. In the weeks following a memorandum of understanding with the U.S., Iran managed to export 70 million barrels, primarily to China, its largest customer. However, more than 18 million barrels of non-Iranian oil remain on tankers outside the Persian Gulf, awaiting buyers—over 2.5 times the pre-war levels, Kpler reported.
Background
The Strait of Hormuz has become increasingly dangerous due to military actions between the U.S. and Iran. The U.S. has conducted airstrikes against Iranian military targets since July 11, while Iran has retaliated with missile and drone attacks on U.S. forces and shipping targets. The Joint Maritime Information Center (JMIC) reported a severe threat level for the Strait, with 10 Iranian attacks on shipping recorded since June 25. The Iranian Revolutionary Guard Corps (IRGC) has warned that the strait will remain unsafe for oil and gas transit as long as U.S. strikes continue.
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The decline in demand for oil from the region is likely to pressure prices, particularly for Middle Eastern crude. The ongoing military tensions in the Strait of Hormuz could further disrupt supply chains, affecting oil prices globally. Investors will watch for any changes in U.S. military strategy or diplomatic efforts in the region that could influence market stability.