Brent Crude Falls to February Low as Stranded Barrel Clearance Weighs on Near-Term Oil Prices
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Brent crude dropped 2.3% to $75.35 on Wednesday, the lowest since Feb 27 — backlogged oil from the Strait of Hormuz blockade is flooding back into the market, and the near-term supply glut now outweighs the geopolitical premium.
The world just saw its biggest supply disruption — so why is oil falling?
The Strait of Hormuz was blocked during the US-Israel campaign against Iran, trapping huge volumes of crude in the Persian Gulf.
Now the strait is reopening and those backlogged barrels — the industry calls them "stranded barrels" — are hitting the market all at once.
This means → the market has flipped from a "crisis-premium phase" to a "clearance phase." Traders are no longer pricing whether supply breaks — they are pricing how fast the backlog clears.
How large is the backlog, and where is it going?
Asian refiners already bought roughly 60 million barrels across three consecutive ADNOC tenders; their appetite is now largely sated.
With Asian buyers pulling back, some Middle Eastern cargoes are redirecting west to Europe, reshaping trade flows.
Dubai and Murban crude forward curves have flipped into contango — near-month prices sit below later months. In plain terms = the front end is oversupplied, and sellers are discounting to move volume.
Could oil fall all the way back to the pre-war $60–70 range?
Saxo Bank head of commodity strategy Ole Hansen sees limited scope for Brent to slide back to the pre-war $60–70 band, "unless demand destruction deepens materially."
He cites three structural supports: depleted inventories, strategic-reserve rebuilding needs, and higher energy-security costs.
This means → the clearance-driven downside is a short-term story. On a medium-term view, supply security still underpins the price — a full return to pre-war levels looks unlikely.
What is the current state of the Strait of Hormuz?
Oman announced two temporary shipping lanes flanking the existing channel to help vessels depart safely, with no transit fees.
Qatar's prime minister said the country will resume normal LNG production within weeks.
In plain terms = the strait is open, gas output is coming back, and the physical bottleneck is unwinding.
Why is Trump going after the oil majors?
Trump posted on Truth Social Wednesday accusing big oil companies of cutting retail gasoline prices far less than their crude acquisition costs have fallen.
He announced he has directed the Department of Justice (DOJ) to investigate.
This reflects an old friction: when crude drops, pump prices tend to follow slowly — and politically, that lag is an easy target.
What does the market watch next?
Variable one: whether Asian refiners launch a new restocking cycle once the current buying wave settles.
Variable two: the actual pace of backlog shipments — faster clearance means heavier near-term pressure; slower clearance lets prices stabilize sooner.
This means → these two variables will determine whether the supply shock is absorbed within Q3, and how long the clearance phase lasts.
Content is for reference only, not financial advice.