The last oil tankers to traverse the Strait of Hormuz before the outbreak of war will reach refineries in the coming days, in a pivotal moment analysts warn could herald physical shortages in Europe and the US within weeks.
The final ships to clear the strait before the Iran war began on February 28 are expected to reach their destination in Malaysia and Australia by April 20, intensifying the supply shock rippling across Asia.
But with Asian refineries responding by buying up a record number of crude oil cargoes that would normally have sailed to Europe and the US, analysts said refiners in some of the world’s wealthiest countries may soon also face shortages.
“It will hit the west in a month when all the Asian cargoes bought leave the Atlantic basin,” said Nic Dyer, an analyst at Energy Aspects.
“Refineries in Europe and the US will also have to cut runs from next month to share the pain of the shortage.”
Dyer said refineries in Asia were reducing operations because of issues in accessing enough crude oil, even as they drew down strategic reserves and bought record volumes of Atlantic basin crude from the US, Canada, the North Sea, South America and Africa.
Most prewar deliveries to Asia, which sources about 80 per cent of its crude from the Middle East, stopped around April 1, although at least one cargo of Iraqi oil to Malaysia is expected this week.
The last prewar deliveries to the US are set to end this week, while those to Africa had landed by April 10, according to JPMorgan. Denmark received its last jet-fuel cargo from Kuwait at the weekend, the Wall Street bank said.
Signs of growing strain in the physical market have emerged in the past week, with prices for cargoes for immediate delivery soaring well above future contracts.
Forties Blend, a North Sea grade, soared close to $149 a barrel on Monday, above the highs reached on the eve of the 2008 financial crisis, according to LSEG data. The uncommonly large premium over the price of Brent crude futures, which are trading at about $100 a barrel, reflects refiners’ desperation to secure supplies.
“Signs are emerging that the system may be coming under increasing strain,” said Natasha Kaneva, a JPMorgan analyst.
“European and Asian refiners are competing aggressively for the remaining cargoes, driving spot Brent price — more directly tied to prompt physical delivery than Brent futures — to record highs.”
Fatih Birol, head of the International Energy Agency, said the group’s member countries could inject more strategic oil stockpiles on to the market to douse further escalation in crude prices. Members have already committed a record 400mn barrels of emergency stocks.
“If and when we decide it is the time, we are ready to act, and act immediately,” Birol said.
The last prewar deliveries coincide with the imposition on Monday of a US naval embargo on the strait, through which about a fifth of global oil and liquefied natural gas supplies normally moved before the war.
Donald Trump has suggested any vessels attempting to breach the US blockade could be seized, as Washington attempts to press Iran by preventing it from shipping oil to China.
Kurt Barrow, head of research for crude oil markets at S&P Global Energy, said: “The Strait of Hormuz is still effectively closed and it’s unclear how the strait reopens to a state of normalcy. Physical barrels remain locked in the Gulf and the risk level of a ship entering the Gulf to load is even higher.”
Patrick Pouyanné, TotalEnergies chief executive, on Monday warned there would be “serious supply issues” of some fuels unless the strait was reopened to traffic soon.
“If this war and this blockade lasts more than three months we will begin to face some serious supply issues in some products like jet fuel,” he said at the Semafor World Economy forum in Washington. “So planes will have to be rationed, or diesel, and of course LNG gas.”
Energy Aspects said arrivals of crude into Asia from within the strait, excluding Iranian barrels, had fallen to a low of an average 4mn barrels per day in the first two weeks of April, compared with the usual 13.4mn barrels per day.
The supply shock is causing hardship in countries dependent on energy imports from the Middle East.
The Philippines, which imports more than 95 per cent of its oil from the Middle East, has declared a national energy emergency after local petrol prices doubled.
Indonesia and Vietnam have instructed people to work from home. Australia, which is due to receive its last cargo from the Middle East on April 18, has released fuel reserves, cut fuel taxes and rolled out a national fuel security plan.
A report published on Monday by the UN Development Programme warned as many as 32.5mn people risk falling into poverty as a result of the triple shock of energy affordability and availability, food price increases and economic downturns linked to the Iran war.
Additional reporting by Martha Muir and Myles McCormick