The diplomatic breakthrough masking an operational reality
The signing of the US-Iran Memorandum of Understanding and broad sanctions waivers have prompted markets to declare normalcy is returning to the Strait of Hormuz. Crude prices have fallen. Iranian oil is flowing again. The crisis, it seems, is over.
But those managing global supply chains and shipping operations should look beyond the headlines. The much-celebrated headlines mask a far more complex operational reality: shipping remains the single biggest constraint on traffic recovery through one of the world’s most critical chokepoints.
The supply surprise no one expected
US sanctions waivers have made far more Iranian crude available globally than anticipated. We calculate 130–150 mb of Iranian oil has been made available, including 22 mb in export terminal tanks, 55 mb on vessels previously stuck, and a further 25–40 mb floating off Asian shores. China will remain the key buyer.
The broader Middle Eastern story tells a similar tale. The increase in Middle Eastern export flows through June led to widespread belief that regional production had recovered to pre-conflict levels. However, satellite analysis and on-the-ground sources suggest the ramp-up has not progressed that far. The June surge was driven by stranded vessel flows (1.8 mb/d) and destocking (0.5 mb/d). Middle Eastern output remains well below pre-conflict levels, and Hormuz throughflows remain volatile and hard to tally due to “dark” transits and AIS reactivation risks. Only 35 mb of stranded volumes remain within the strait — a sign of emerging tightness ahead.
