Oil Jumps as Iran Conflict Disrupts Supply and Shipping Through Hormuz

Oil prices surged as the U.S.–Israeli war with Iran disrupted global energy flows, with WTI rising 8.5% to $81 and Brent up nearly 5% to $85, both hitting multi-month highs. Shipping through the Strait of Hormuz has nearly halted, forcing Iraq to shut about 1.5 million bpd of crude output and Qatar to halt LNG production due to lack of tanker access. Around 300 oil tankers remain stuck in the region while attacks on vessels continue, tightening supply and pushing fuel prices higher. Analysts warn that even if the strait reopens soon, restarting production and shipping could take time, keeping oil markets under pressure.

___________________________________

Headlines

· Trump Administration Weighs Broad Options to Tame Rising Oil Prices

· Kuwait, UAE Seen Next to Cut Output as Hormuz Blockage Fills Storage

· Drone Attack Halts Iraqi Kurdistan Oilfield

· War Insurance Offered for Ships Amid Strait of Hormuz Crisis

· Saudi Arabia Hikes April Arab Light Prices for Asia and Global Markets

· China in Talks with Iran to Secure Safe Oil and Gas Transit Through Hormuz

· China Orders Top Refiners to Suspend Diesel and Gasoline Exports

· Japanese Oil Refiners Call on Government to Release Strategic Reserves

· India Turns to Russian Crude as Middle East Conflict Tightens Oil Supply

· Iran Conflict Gives Russia a Chance to Rebuild Reserves

· VLCC Spot Prices Push Near $697,000/Day

· Product Tanker Rates Surge, But Actual Earnings May Fall Short

___________________________________

Tankers Attacked in Gulf as U.S.–Iran Conflict Escalates and Shipping Disruptions Spread

More tankers were attacked in Gulf waters as the U.S.–Iran conflict intensified, with one crude tanker struck by an explosive drone boat near Iraq and another damaged by an explosion off Kuwait. Since the war began, nine vessels have been targeted while around 200 ships remain anchored near Gulf producers and many more wait outside the Strait of Hormuz. Energy infrastructure is also being affected, with Iraq cutting oil output, refineries in Kuwait and Bahrain reducing operations, and BP evacuating staff from Iraq’s Rumaila field. Oil prices have surged about 16% since the conflict started, while gas markets have tightened as Qatar halted LNG production and global supply alternatives remain limited.

___________________________________

War Insurance Offered for Ships Amid Strait of Hormuz Crisis

Lloyd’s Market Association says marine war insurance is available for vessels seeking to transit the Strait of Hormuz, though shipowners remain wary due to safety risks amid the Iran conflict. Underwriters, including brokers like Arthur J. Gallagher, confirm cover is offered for ships entering, exiting, or remaining in the Persian Gulf, but rates have risen. Despite insurance availability, crews are reluctant to sail through the strait until hostilities subside. The LMA is coordinating with the US government and financial institutions to maintain solutions that support global trade while protecting ships and crews.

___________________________________

Trump Administration Weighs Broad Options to Tame Rising Oil Prices

The Trump administration is considering a wide range of measures to address soaring oil and gasoline prices caused by the Iran conflict, aiming to blunt economic and political fallout. Options being explored include providing insurance and naval escorts for tankers through the Strait of Hormuz, waiving federal gasoline blending requirements, a potential gasoline tax holiday, and even unprecedented action in the oil futures market to influence prices. Officials have also discussed the possibility of releasing crude from the Strategic Petroleum Reserve, though no release has been made yet. The moves come as Trump emphasizes the priority of military operations over short‑term fuel costs while advisers push for steps that could ease price pressures ahead of U.S. elections.

___________________________________

Kuwait, UAE Seen Next to Cut Output as Hormuz Blockage Fills Storage

Kuwait and the UAE could soon be forced to cut oil production if exports through the Strait of Hormuz remain blocked due to the Iran crisis, as storage tanks rapidly fill up, analysts and traders say. Iraq has already reduced output by about 1.5 million bpd and could deepen cuts to over 3 million bpd within days if exports cannot resume. JPMorgan estimates Kuwait may have about 18 days before it must curb production, while the UAE has roughly 22 days if shipping disruptions persist.

___________________________________

Drone Attack Halts Iraqi Kurdistan Oilfield

A drone strike hit the Sarsang oilfield in Iraqi Kurdistan, operated by U.S. firm HKN Energy, stopping its 30,000-bpd production. Kurdish officials blamed Iran-aligned militias, expanding attacks from U.S. military sites to energy assets. The explosion occurred at the field’s power unit. Other companies in the region also paused operations as a precaution after U.S. and Israeli strikes on Iran.

___________________________________

Saudi Arabia Hikes April Arab Light Prices for Asia and Global Markets

Saudi Arabia raised the official selling price (OSP) of its Arab Light crude for April, setting it $2.50 per barrel above the Oman/Dubai average for Asia, up from parity in March. The Mediterranean OSP increased to a $2.65 premium to ICE Brent, reversing last month’s $0.85 discount. Arab Light prices for Northwest Europe rose $3.50 to a $2.85 premium, and North American prices climbed $2.50 to a $4.60 premium to ASCI. The increases reflect tightening global supply and Middle East market disruptions. Aramco’s adjustments signal continued focus on maximizing revenues amid regional tensions.

___________________________________

China in Talks with Iran to Secure Safe Oil and Gas Transit Through Hormuz

China is in talks with Iran to secure safe passage for crude oil and Qatari LNG tankers through the Strait of Hormuz as the U.S.-Israeli war with Tehran intensifies, according to diplomatic sources. The conflict has nearly halted shipping through the critical chokepoint, which carries about a fifth of global oil and LNG supplies, while China relies on the route for roughly 45% of its crude imports. Beijing is reportedly urging Iran to allow vessels through the strait to stabilise energy flows and ease pressure on global markets. Tanker traffic has collapsed from an average of 24 vessels per day to just four after the conflict began, leaving around 300 tankers stranded in the region.

___________________________________

China Orders Top Refiners to Suspend Diesel and Gasoline

China has directed its major refiners, including Sinopec, PetroChina, CNOOC, Sinochem, and Zhejiang Petrochemical, to halt diesel and gasoline exports to prioritize domestic supply amid the escalating Persian Gulf conflict. The suspension affects new contracts and may cancel existing shipments, though jet and bunker fuel for bonded storage and Hong Kong/Macau remain exempt. China’s quota system normally controls refined product exports, allowing authorities to balance domestic demand and respond to market disruptions. With Gulf crude supplies blocked by the US-Israel-Iran conflict, other Asian nations, including Japan, India, and Thailand, are also limiting fuel exports or reducing refinery run rates.

___________________________________

Japanese Oil Refiners Call on Government to Release Strategic Reserves

Japanese refiners are urging the government to release crude from the nation’s strategic petroleum reserves and jointly held stockpiles to address supply disruptions caused by the Iran conflict. Japan relies on the Middle East for over 90% of its oil, and blocked Strait of Hormuz exports have forced at least one refiner to cancel March shipments to prioritize domestic needs. The government holds enough oil for roughly 254 days of consumption, including national and private reserves, with additional stock under joint arrangements with Saudi Arabia, UAE, and Kuwait. Neighboring countries, including China and Thailand, are also restricting fuel exports to conserve energy. The release process may take time, prompting refiners to request an expedited approach to avoid shortages.

___________________________________

India Turns to Russian Crude as Middle East Conflict Tightens Oil Supply

Indian refiners are purchasing large volumes of prompt Russian crude cargoes to offset supply disruptions caused by the Iran conflict and reduced Middle East flows. India relies on the Strait of Hormuz for about 40% of its oil imports and holds crude stocks covering only around 25 days of demand, leaving it vulnerable to supply shocks. State refiners have already bought roughly 20 million barrels of Russian oil, with Urals crude now trading at a $4–$5 premium to Brent delivered to India. The shift comes despite earlier U.S. pressure on New Delhi to cut Russian purchases, and India has reportedly sought approval from Washington to increase imports amid the crisis. Availability of crude rather than price is now the key concern for Indian refiners scrambling to secure supplies.

___________________________________

VLCC Spot Prices Push Near $700,000/Day

VLCC rates are hitting record highs amid the Iran conflict, with Emibiricos’ Kalamos set to earn nearly $697,000/day and Dynacom’s Adamantios $538,000/day for Middle East–Asia voyages. These rates surpass the previous record of $429,000/day but remain largely theoretical, as no cargoes have physically lifted since the war began. Saudi Arabia is diverting oil to the Red Sea port of Yanbu, which has limited 4.5m bpd capacity versus total output of 7.2m bpd. Strait of Hormuz traffic has almost halted due to Iranian threats and withdrawn war-risk insurance, leaving only a handful of tankers crossing, mostly Iranian-flagged. Additional VLCCs are set to load at Yanbu, including Nigerian and Bahri-owned vessels, amid continued tanker scarcity.

___________________________________

Product Tanker Rates Surge, But Actual Earnings May Fall Short

Product tanker rates have surged due to the Iran conflict, with LR2s hitting $116,900/day and some Middle East–Japan marks theoretically at $160,000/day, though analysts say such levels are unlikely in practice. Rates for LR1s and MR tankers have also jumped as end users stockpile jet fuel, diesel, and other products. Around 4% of the global product tanker fleet is stuck in the Middle East Gulf due to Iranian threats, and many insurers have canceled war-risk coverage, though the U.S. offers protection.

___________________________________

Shell Signs Oil and Gas Exploration Deals with Venezuela

Shell has signed several agreements with Venezuela covering offshore gas and onshore oil and gas projects. The deals include partnerships with VEPICA, KBR and Baker Hughes and are tied to Venezuela’s new hydrocarbons law aimed at attracting foreign investment. The agreements may help advance Shell’s long-delayed Dragon offshore gas project following recent U.S. licenses allowing exploration activity.