Oil Flows Through Hormuz Drop to 5-7 Million Bpd
Crude shipments via the Strait of Hormuz have fallen to 5-7 million barrels a day. Strategic reserves in the US are at their lowest since the 1980s.
Key points
- Oil flows through the Strait of Hormuz have dropped to 5-7 million barrels per day.
- The US Strategic Petroleum Reserve is at its lowest level since the early 1980s.
- China is ramping up crude imports after cutting them by 5 million barrels daily.
Crude oil flows through the Strait of Hormuz have collapsed to 5-7 million barrels per day. This volume represents only one third of pre-conflict shipping levels.
MST Marquee analyst Saul Kavonic warns that the market is operating on a credit card. Strategic buffers such as stock draws and low Asian demand are now exhausted.
Strategic reserves hit historic lows
The US Strategic Petroleum Reserve holds its lowest crude levels since the early 1980s. Record releases by the IEA depleted inventories across developed economies rapidly.
These depletions removed a critical shock absorber for the global supply chain. Prices remain near 100 dollars per barrel despite significant supply disruptions.
China reverses import reduction strategy
China cut crude imports by 4-5 million barrels per day in May and June. The country is now gradually ramping up purchases again, reversing that trend.
This shift removes a major demand-side balancing mechanism that previously capped price spikes. Buyers are now forced to rely on more expensive alternative routes.
Alternative routes face physical limits
Saudi Arabia offsets lost Red Sea shipments via ship-to-ship transfers outside Oman. This mechanism supports only half of the lost 5 million barrel volume.
Kavonic notes that diplomatic solutions remain unlikely in the current stalemate. The market faces potential tightening before any significant improvement occurs.
