Middle Eastern fuel oil exports are on track to hit a four-month high in June, yet crude prices have tumbled to their lowest levels in months as the Strait of Hormuz tentatively reopens, exposing a fragile and uneven recovery in regional energy flows following the U.S.-Iran ceasefire.
Brent futures settled down 82 cents, or 1.1%, at $77.08 per barrel on Tuesday, while U.S. West Texas Intermediate (WTI) futures fell 65 cents, or 0.9%, to $73.21 a barrel. Both benchmarks touched near-four-month lows during the session, extending a 3% rout on Monday triggered by news of a 60-day U.S. sanctions waiver for Iran and a broader lull in hostilities.
The divergent signals—rising fuel oil loadings but slumping crude prices—underscore the complexity of restarting energy supply chains that were severed when the Iran war shut the world’s most critical oil chokepoint for more than three months. At its peak, over 14 million barrels per day of output was shut in, equivalent to roughly 14% of global demand, according to the International Energy Agency.
Middle East fuel oil exports are projected to reach about 2.4 million metric tons, or 508,000 barrels per day, this month, up more than 20% from May, according to shipping data from Kpler and LSEG. That marks the strongest volume since February, but it remains a fraction of the pre-war monthly average of 5.5 million to 6.0 million tons.
“Fuel oil flows through the Strait of Hormuz are expected to increase over the next 60 days, but the recovery is unlikely to be substantial,” said Palash Jain, Middle East oil consultant at FGE NexantECA. Jain cited lingering uncertainty over the durability of the peace deal, tight regional balances, limited scope for a sharp increase in refinery runs, and upcoming peak summer demand as factors that will cap export growth.
Late Wednesday, the Aframax tanker Gamsunoro, carrying about 80,000 tons of fuel oil loaded in Iraq, exited the strait and headed for Fujairah, LSEG shipping data showed—one of the early signs that commercial traffic is slowly resuming.
The reopening of Hormuz has already reshuffled regional export patterns. Before the war, Iraq, Kuwait, Iran, and the United Arab Emirates dominated fuel oil outflows. Now, the top three high-sulphur fuel oil exporters in June are Syria, Saudi Arabia, and Oman.
Iraq has dramatically rerouted its exports through Syria’s Baniyas port, trucking millions of barrels across the country for re-export. Volumes through that corridor hit a record high of over 600,000 tons in June. “Iraq remains focused on diversifying export routes, with the Syrian corridor serving as a strategic alternative to Hormuz,” Jain said.
Saudi Arabia, meanwhile, is set to export over 300,000 tons of fuel oil in June—a five-month high—from its Red Sea port of Yanbu, where it has diverted supplies away from the Gulf. Oman is also ramping up, with fuel oil exports expected to reach nearly 300,000 tons, the highest in more than two years.
Yet Iranian fuel oil trade is expected to remain constrained despite the interim deal’s sanctions waiver. Trading sources say banking and payment channels remain a critical hurdle, effectively capping any rapid resurgence in Iranian barrels.
On the crude side, Iraq has raised output from its southern oilfields to about 2.1 million barrels per day as more tankers queue at Gulf export terminals, two Iraqi oil officials told Reuters. But Saudi Arabia—OPEC’s top exporter—saw crude exports fall for a second straight month in April to a record low, according to Joint Organizations Data Initiative data.
The tentative nature of the peace arrangement was underscored by an Iranian military source who told Fars News Agency that only a limited number of vessels are being allowed through the strait each day, under coordination with Iran’s Revolutionary Guards Navy. U.S. Secretary of State Marco Rubio said Tuesday that Iran would not be permitted to charge tolls on the waterway in any final agreement, calling such an arrangement a violation of international law.
Ship-tracking data showed three stranded supertankers transited the strait on Tuesday, while seven empty Qatar-linked LNG carriers have entered the area in recent weeks. The UN’s International Maritime Organization said an evacuation plan is underway to enable hundreds of ships with 11,000 seafarers stranded in the Gulf to sail through the strait.
President Donald Trump said 19 million barrels of oil flowed out of the strait on Monday, touting falling oil prices as evidence of progress.
Despite the diplomatic momentum, analysts cautioned that a full normalization of traffic is far from assured. “Ship owners and operators will require assurances that the threats posed by mines have been fully eliminated. Damaged ports, debris in the water and congestion present additional obstacles to an unconditional ramp-up in traffic,” said Tamas Varga, analyst at PVM Oil Associates.
Ole Hvalbye, market analyst at SEB Research, said the easing of sanctions would not weigh heavily on prices in the short term because the U.S.-Iran memorandum of understanding remains “new and fragile.”
In the United States, crude, gasoline, and diesel stockpiles likely declined last week, a preliminary Reuters poll showed, while the Department of Energy reported that crude inventories in the Strategic Petroleum Reserve fell to their lowest level since June 1983. Energy consultancy Gelber & Associates said that historically low SPR levels “are expected to keep a firm structural floor under the market in the weeks ahead,” even as speculative long positions unwind.
The contrasting trajectories of fuel oil exports and crude benchmarks reflect a market caught between the promise of restored supply and the practical challenges of navigating a war-scarred waterway. For now, the risk premium that inflated prices during the conflict is deflating faster than actual barrels are returning to market.
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