Oil Supply Floods Market After Hormuz Reopening, Brent Falls Below $75
0xBroomberg
With the US-Iran deal in place and the Strait of Hormuz reopening, pent-up crude is pouring into global markets. Brent has broken below $75 a barrel for the first time since the conflict began — a rapid unwind of the war premium.
How far have prices fallen?
At the peak of war-driven panic in early April, the physical benchmark Dated Brent touched a record above $140 a barrel.
It has since roughly halved, falling back to near pre-conflict levels.
This means → the market erased almost the entire war premium in under two months.
Who is selling, and where is the oil coming from?
The UAE and Kuwait were already shipping large volumes via "dark fleet" vessels — ships that switch off tracking systems to evade sanctions — before the US-Iran deal was formally signed; the IEA estimates UAE exports had recovered to roughly 85% of pre-war levels.
Iran shipped about 30 million barrels to Asia before the US issued a 60-day sales waiver.
The UAE has sold roughly 60 million barrels of Persian Gulf crude through recent tenders. Saudi tanker giant Bahri, previously uninvolved in dark-fleet shipping, is now actively moving stranded cargoes.
In plain terms = producers were racing to offload backlogs before the strait was even fully clear.
What unusual signals are buyers sending?
Angolan crude — normally snapped up fast by Chinese buyers — traded at a discount of nearly $10 a barrel to Dated Brent, the widest in over a decade.
More striking: Chinese refiners are reselling crude cargoes, the reverse of their normal import-and-process flow.
This reflects a market where Asian demand simply cannot absorb the sudden flood of supply — buyers have flipped from hoarding to dumping.
How has market structure shifted?
Middle Eastern crude moved into contango — a futures structure where near-term contracts trade below later ones, signaling expected oversupply — starting mid-month.
Goldman Sachs global commodities co-head Daan Struyven noted: "Buying a barrel of spot crude is now actually cheaper than buying a forward barrel."
This means → pricing has flipped from "spot is scarce, bid it up" to "too much oil right now, nobody is rushing to buy."
Where is the surplus oil going?
Cargoes originally bound for Asia are being rerouted to Europe — at least six supertankers carrying roughly 12 million barrels of UAE and Omani crude are expected to arrive in Europe next month.
Nigeria's Dangote refinery purchased UAE crude for the first time, a sign of how aggressively the market is hunting for new outlets.
In plain terms = Asia is full, so the overflow is heading to Europe and Africa — even buyers who never touched Middle Eastern crude are being pulled in.
Can the glut last? What is the risk?
The IEA last week forecast a significant global oil surplus by 2027.
Yet US crude inventories — including strategic reserves — sit at their lowest since 1984, and Cushing hub stocks are near operational minimums.
This means → the world looks awash in oil right now, but strategic stockpiles drained during the blockade need refilling. Once restocking begins, it will absorb part of the surplus — and the current low-price window may not stay open for long.
Content is for reference only, not financial advice.