The Truth About Crude Oil Under the Hormuz Blockade: An Iran War Won’t Alter Oversupply—A Sharp Drop Is Imminent

The Iran conflict has now lasted nearly one and a half months, yet international crude oil prices have remained fluctuating within the $90-per-barrel range. Although tensions have ebbed and flowed—and the intensity of hostilities has repeatedly surged and subsided—when viewed over this 1.5-month timeframe, short-term sentiment shocks have largely been absorbed. Current oil prices are fundamentally determined by real supply-demand fundamentals. The price level near $90 is not driven by scarcity, but rather reflects a阶段性 equilibrium reached through market self-adjustment; at this level, there is no substantive global crude oil shortage. Many wonder: Given that the Strait of Hormuz—the world’s most critical oil chokepoint—handles nearly 20 million barrels per day (bpd), why hasn’t its disruption triggered an oil shortage? A review of recent market developments clearly reveals that global supply chains are repairing themselves and filling gaps at an astonishing pace. From a supply-demand data perspective, while the theoretical shortfall caused by the Strait’s disruption is substantial, rapid rerouting and increased production from multiple countries have already offset a large portion: Saudi Arabia’s east-west pipeline transit capacity has risen to 7 million bpd; the UAE’s pipeline transit stands at 1.8 million bpd; Iraq’s northern route contributes 600,000 bpd; and even amid the conflict, Iran continues exporting 2.1 million bpd. Together, these four sources alone compensate for roughly 11 million bpd of lost seaborne capacity—reducing the theoretical shortfall to about 9 million bpd. The remaining gap is being rapidly absorbed: Russia and Iran have collectively offloaded massive volumes of previously stockpiled seaborne crude—over 100 million barrels held in floating storage—discharging at approximately 2 million bpd. Coupled with Russia’s deliberate output increases, another ~2 million bpd is added, narrowing the gap further to 7 million bpd. Meanwhile, U.S. crude exports have hit record highs; Venezuelan output has rebounded to 1.2 million bpd; and Guyana, Brazil, Nigeria, and several African nations have all ramped up production, contributing at least another 1.5 million bpd in new supply—shrinking the gap once more to 550,000 bpd. Demand-side contraction is likewise helping rebalance the market: China’s refined product imports in March fell by 1 million bpd compared to February—a direct reflection of high prices suppressing consumption. By extrapolation, it is unsurprising that other countries’ demand collectively declines by 2 million bpd under price pressure. At this point, the net supply-demand gap has shrunk to just 200,000 bpd. Adding in strategic petroleum reserve releases—Japan and others are releasing up to 4 million bpd daily—the market is no longer facing scarcity; instead, it has already tipped into oversupply.

Strait of Hormuz Situation, U.S.-Iran Strategic Rivalry, and Oil Price Outlook

3.1 Two Parallel Tracks: Fighting While Negotiating Track A: Military Escalation (Pushing Up Risk Premium) ・ The U.S. military’s 'Iron Wall' maritime blockade will reach its 100-day mark on October 23, 2026, having blocked at least $25 billion worth of Iranian oil exports (U.S. Central Command; 21st Century Business Herald, October 24, 2026). ・ Over 20 vessel attacks were reported in and around the Strait during the first two weeks of October; on October 22 alone, seven ships were attacked or struck mines; on October 19–20, U.S. MQ-9 drones were shot down (the 54th such incident to date). ・ Multiple U.S. media outlets report that U.S. and Israeli militaries have drawn up concrete plans for renewed strikes against Iran after the U.S. midterm elections—potential targets include energy infrastructure, nuclear facilities, and missile and drone arsenals. On October 23, Trump suggested a possible small-scale 'Epic Fury' operation. ・ Iran’s countermeasures: Threatening to expand strikes to U.S. assets across West Asia—including data systems and AI infrastructure; the Islamic Revolutionary Guard Corps (IRGC) highlighted that seven major undersea fiber-optic cables traverse the Strait of Hormuz; Iran has deployed mines and automated control systems east of the Strait. ・ On October 31, Israeli Prime Minister Netanyahu spoke with Trump by phone, urging an immediate resumption of war against Iran following the election—and expressing concern over U.S.-Iran negotiations mediated by Qatar. Trump, meanwhile, stated he wants 'negotiations to proceed fully.' Track B: Diplomatic Mediation (Pressing Down Risk Premium) ・ On September 28, Iran proposed a 'Seven-Day Plan' via Qatar: the U.S. must lift the maritime blockade, rescind oil export sanctions, unfreeze Iranian assets, and restore regional ceasefire; Iran would reopen the Strait and resume nuclear talks within seven days. ・ On October 11, Iran stated the U.S. had 'accepted some conditions' but its response was 'insufficient'; on October 25, Iran’s newly inaugurated president declared the interim agreement had failed; on October 28, Secretary of Iran’s Supreme National Security Council Ali Akbar Ahmadian said the Strait would reopen 'within four to seven days' upon lifting port blockades and oil sanctions. ・ On November 1, Qatari mediators held their third consecutive day of talks with the Iranian delegation; Iranian Foreign Minister Hossein Amir-Abdollahian confirmed agreement on a 'Two-Day Plan': Day One—U.S. fulfills commitments (unfreezing funds, lifting the maritime blockade, granting oil export exemptions); Day Two—the Strait reopens and traffic resumes, followed only then by renewed negotiations. ・ On November 2, Iranian President Masoud Pezeshkian announced the Supreme Leader had granted the government 'certain authority' to pursue peace talks; Iranian Foreign Ministry Spokesperson Nasser Kanaani emphasized, 'It depends entirely on the U.S.’s decisions, actions, and concrete steps.' ・ The U.S. side simultaneously signaled de-escalation: Rubio stated Trump leans toward a diplomatic resolution; Trump remarked, 'They want a deal—and it’s possible,' and when asked whether military action would resume post-election, replied, 'No,' adding, 'Oil prices fell like a stone today—down nearly $10 per barrel, a historic drop—because people feel war with Iran won’t happen.' Vice President Vance noted 'multiple productive dialogues' and expressed 'considerable optimism about prospects for a negotiated settlement.' 3.2 Three Unresolved Core Disputes 1. Sequence of Implementation and Guarantees: The U.S. refuses to lift sanctions first (which would implicitly validate Iran’s 'blockade leverage'), while Iran refuses to reopen the Strait first—mutual distrust and lack of implementation guarantees persist. 2. Whether the Nuclear Issue Proceeds in Tandem: Iran states it will adopt a flexible stance on nuclear issues if an agreement on reopening the Strait is reached; the U.S. insists nuclear concessions and Strait reopening must proceed concurrently. 3. Conflicting Narratives on 'Progress in Talks': Iran’s Fars News Agency and several domestic outlets claim 'no progress, no new developments' in U.S.-Iran communications—the Strait remains fully under Iranian military control; yet draft agreements are circulating, and new rounds of talks remain possible. As a result, markets exhibit 'one headline, one repricing'—a high-frequency pulse pattern.

IEA: Global Oil Supply Returns to Surplus for First Time Since Iran War Onset

2 hours ago

The IEA reported global oil supply exceeded demand by nearly 2 million barrels per day in October, ending the deficit caused by Middle East conflicts. Recovery in Gulf exports and Opec+ production has eased price pressures and stockpile concerns.

theguardian

2026-07-21

IEA and OPEC Downgrade 2026 Global Oil Demand Forecast

2026-08-12

Oil drops on lower demand forecasts despite deadlock in US-Iran talks

2026-08-18

IEA Outlook 2027 Global Oil Market: From Short-term Volatility to Medium-to-Long-term Rebalancing

2026-11-13

IEA: Global Oil Supply Returns to Surplus for First Time Since Iran War Onset

IEA: Global Oil Supply Returns to Surplus for First Time Since Iran War Onset

FAQ