Oil Supply Surge Could Push Brent Below $75 as Strait Reopens

Published by James Harris on June 18, 2026June 18, 2026

The Strait of Hormuz is expected to reopen Friday following a digitally signed 14-point interim agreement between the United States and Iran, with President Trump and Iranian President Masoud Pezeshkian executing the deal Wednesday. Iran’s foreign ministry said it took effect immediately, ending a closure that had been in place since the US and Israel attacked Iran on February 28.

The physical supply math is significant. Kpler analyst Muyu Xu estimates roughly 93 million barrels of non-Iranian crude remain stranded in the Gulf, with an additional 72 million barrels of Iranian crude accumulating in tankers west of Chabahar. Vortexa’s satellite data from mid-May counted 54 VLCCs in the Persian Gulf carrying up to 87 million barrels. Kpler estimated Monday that 118 tankers were trapped in the Gulf and that the queue would take 10 to 15 days to clear, with the first surge in crossings representing backlog relief rather than a durable increase in daily throughput. Gulf producers have already been moving product through ship-to-ship transfers near the UAE and Oman, pushing regional grades below benchmark prices before the strait formally reopens.

The market is not waiting for buyers to catch up. Goldman Sachs cut its Brent forecast for Q4 2026 from $90 to $80 per barrel and lowered its 2027 average projection to $75, citing expectations that flows could resume faster than anticipated at around 11 million barrels per day.

The demand side complicates any straightforward supply-release narrative. Most Asian refiners have already booked deliveries through August, and China has significant refinery maintenance scheduled, with Energy Aspects projecting more than 1.8 million barrels per day of Chinese refining capacity offline in July. China’s processing rate fell near a four-year low in May, and fuel demand remains structurally soft as electric vehicles absorb a growing share of the country’s transport market. Kpler expects Indian demand for Gulf crude to recover slowly, adding roughly 400,000 to 600,000 barrels per day of Middle Eastern imports through August. A flood of Gulf supply landing into a market with constrained near-term absorption is the scenario that pressures prices most, not the reopening itself.

Taiwan’s CPC said it can absorb heavier, higher-sulfur grades once Hormuz reopens, using them to produce bitumen and sulfur for the domestic market. Oil tankers and LNG vessels are expected to be prioritized in the queue, while container and commercial ships may face longer waits, meaning the energy supply relief arrives before broader trade normalization does.