Oil Flows and Market Impact and Hormuz Flows

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There could be a deal between the USA and Iran. This would restore oil traffic over the next 30-60 days. The US has a southern route through Hormuz that has about 3-7 million barrels per day which is two to four large oil supertankers per day.

US Energy Secretary Chris Wright said vessels under US protection were carrying about seven million barrels of oil per day through the Strait of Hormuz .

China was the biggest reason oil wasn’t higher Beijing had stepped back from the spot market and was drawing down its own stockpiles rather than pay up. A buyer that size sitting out is the only thing capable of capping a market this tight. What is and was China waiting for? A lower price.

The deal just handed them one Brent fell from $93 to $83 in 5 sessions. If $83 is the level that brings the world’s largest crude importer back to the table, the whole setup flips. How China integrates back into buying is why the oil prices will be fluctuating in the $70-85 per barrel range. China’s return turns can be a demand shock that sends oil higher or a sign that supply has genuinely loosened. China won’t overpay. I think they cap at $83 per barrel. I think China will manage the re-entry because it is to their advantage.

There are about six cargo and oil tankers going through each day. Kpler and other ship traffic trackers are estimating the ships that go dark.

Typical Phased Timeline

Days to 1–2 weeks — Initial surge from any pre-loaded or quickly loadable tankers once safe passage is confirmed. Easiest wells restart.
Few weeks to 1–2 months — Major ramp-up (50–75%+ of curtailed flows per optimistic views like Blas). Significant export increase.
2–4+ months — Near-full or full steady flows; backlog cleared; insurance/risk premiums normalize.
Longer (months to years) — Complete infrastructure normalization if there is damage. full pre-crisis levels everywhere.

Reopening would enable a rapid supply surge by restarting roughly 10,000 oil wells (shut in for 100+ days) that account for about 15% of global production.

The market is split
Oil price bears expect days to weeks. Oil price bears would be stock market bulls.
Oil price bulls expect 6–8 months or even a year.
Pessimists fear many wells won’t restart at all.

Clearing the backlog of ~800+ trapped ships alone may take a month.

Venezuela crude which is heavy crude and has to mostly go through US refiners before reach final markets is up to 1.3 million barrels per day.

The gulf states and Iran had to curtail production as their storage had filled up. This curtailing harms the oil wells and takes time and effort to partially restore production. This means increased US, Venezulan and Canadian production levels would stay in place for while and could be a relatively permanent market share shift.

The reality of how much oil was getting through and actually gets through is how much real buffer there is for the world energy economy.

1 thought on “Oil Flows and Market Impact and Hormuz Flows”

  1. Russia had to aek Ukraine permission to hold the red swuare parade.
    America had to ask permission to open the Hormuz strait.
    What a time to bexalive.

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