Asian Oil Supply Recovery May Take Months After U.S.-Iran Deal Signing
Miles Bennett
The US and Iran signed a 14-point memorandum on June 17 and Iran reopened the Strait of Hormuz, but analysts warn Asia's oil supply and prices will take months, not weeks to return to pre-conflict levels — tanker cycle times, depleted stockpiles, refinery damage, and the deal's own fragility all slow the recovery.
The strait is open — why can't oil arrive right away?
Chen Chien-Ming, associate professor at Nanyang Technological University, notes that a single tanker round trip between Singapore and the Gulf takes one to two months. This means → even if shipping resumes today, the first cargoes won't dock until August.
Oil inventories across multiple Asian countries have fallen to multi-year lows. Reopening a sea lane doesn't fill empty tanks — the ships are in transit but the warehouses are bare.
Sushant Gupta, Asia-Pacific research director at Wood Mackenzie, expects Asian crude stockpiles to keep falling through August before a slow recovery begins.
What else is blocking the supply side?
Qatar's Ras Laffan — the world's largest LNG terminal — was damaged in the conflict, and refineries cannot restart immediately after shutdowns. In plain terms = crude can move again, but the plants that turn crude into gasoline and diesel are still broken.
Gupta states: "Over the past three months, fuel inventories in many countries have fallen to bare minimums. The chance of returning to pre-conflict levels this year is very low."
This reflects an easily overlooked link: the oil supply chain is not just "ship the crude." Midstream refining capacity is an equal bottleneck.
Why won't oil prices fall quickly?
South and Southeast Asian nations — the hardest hit — plan to aggressively rebuild oil reserves, targeting levels even above pre-conflict stocks. This means → supply and demand are rising in tandem, offsetting each other and slowing any price drop.
Pushan Dutt, economics professor at INSEAD, adds that China and the US also need to replenish strategic reserves. "Demand and supply will rise together, limiting the speed of price declines."
A meaningful drop in oil prices also requires investors to see evidence of lasting security guarantees, including mine-clearing progress and clarity on the sanctions outlook.
Can this deal actually hold?
Chen points out that the memorandum has no enforcement mechanism — either side can walk away at any time. In plain terms = this is a letter of intent, not a contract.
Among Iran's 14 conditions, war reparations and the unfreezing of frozen assets are fundamental obstacles. Iran also demands Israel withdraw from Lebanon and cease military operations — Chen considers this "unlikely to be accepted by Israel."
HSBC analyst Kim Fustier warns: in April Iran announced the strait was open and then shut it again. In May Iran established the Persian Gulf Strait Authority (PGSA) to institutionalize control over Hormuz. If the PGSA persists, "oil flows may stabilize at a level below pre-conflict volumes."
How much longer must Southeast Asia endure?
Philippine President Marcos Jr. declared a national energy emergency in late March. Multiple countries were forced into four-day work weeks, diesel rationing, and restarting coal-fired power plants.
Dutt offers a more optimistic scenario: if the ceasefire holds and no new conflict erupts between Israel and Hezbollah, the timeline for oil-flow recovery could move forward.
But Chen is more cautious: "This is a step in the right direction, but I don't believe this memorandum will evolve into lasting peace." Whether these nations can exit the energy crisis this year ultimately depends on whether the deal survives the political bargaining still ahead.
Content is for reference only, not financial advice.