Iran’s bottleneck is Hormuz, not the buyer

Iranian crude oil volumes sitting in Asian maritime zones have returned to peak levels, totaling 46 million barrels by the end of July. According to Hellenic Shipping News, this accumulation occurred despite a 23.6% decline in total crude on the water across the region between January and July. The surge was accelerated by a three-week sanctions waiver that finalized a refill process already underway since February, contrasting sharply with broader market contractions.

Logistical data indicates that the primary constraint for these supplies is the Strait of Hormuz rather than a lack of market demand. Currently, 76.9 million barrels of Iranian oil are situated across the Gulf region, distributed between the Gulf of Oman and areas west of the strait. Large vessels, particularly Very Large Crude Carriers, dominate the fleet west of the bottleneck, carrying parcels that average 1.77 million barrels as they wait for transit.

Recent shifts in the floating-to-transit ratio suggest that available barrels are being processed as ship-to-ship redistributions rather than static bulk storage. In August, volumes held within Chinese zones dropped by 45%, signaling the first significant discharge of the year. Analysts expect refiners to continue drawing down these commercial inventories over the coming months to bridge feedstock gaps, especially since these nearby supplies can reach Chinese berths in roughly one week.