The Strait of Hormuz is slowly recovering after more than 100 days of disruption, with tankers once again flowing through the key passage. According to trade sources and shipping data cited by Reuters, Middle Eastern fuel oil exports are expected to climb to a four-month high in June, driven by supply diversions from Iraq and Saudi Arabia and a gradual increase in shipments through the strait.
Supply Diversions Drive Export Recovery
Data from Kpler and LSEG, cited by Reuters, indicates that Middle Eastern exports are projected to reach around 2.4 million metric tons (508,000 barrels per day) in June, marking an increase of more than 20% compared with May. However, this remains significantly below the pre-war monthly average of 5.5 million to 6.0 million tons.
Iraq began exporting fuel oil via Syria's Baniyas port for the first time in March, with volumes reaching 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," said Palash Jain, Middle East oil consultant at FGE NexantECA. Before the Iran war, Iraq mainly exported fuel oil from the Khor al-Zubair port.
Saudi Arabia is set to export over 300,000 tons of fuel oil in June, the highest in five months, from the Red Sea port of Yanbu, where it has redirected supplies. Oman fuel oil exports are also expected to reach nearly 300,000 tons in June, marking the highest level in more than two years.
| Country | June Export Volume (metric tons) | Notes |
|---|---|---|
| Iraq (via Syria) | >600,000 | Record high, first via Baniyas |
| Saudi Arabia | >300,000 | Highest in 5 months, via Yanbu |
| Oman | ~300,000 | Highest in >2 years |
The top three Middle Eastern HSFO (high sulfur fuel oil) exporters in June are Syria, Saudi Arabia, and Oman, according to shipping data. Before the war, Iraq, Kuwait, Iran, and the United Arab Emirates were among the leading exporters.
Cautious Recovery Amid Geopolitical Uncertainty
Supply from the region may rise further as more cargoes begin to move out of the strait following an interim agreement between the United States and Iran aimed at ending their conflict. Since the deal, oil prices have tumbled from the beyond $100 per barrel mark to pre-war levels of $70 per barrel.
On Wednesday, the Aframax tanker Gamsunoro, carrying about 80,000 tons of fuel oil loaded in Iraq, exited the Strait of Hormuz and headed towards Fujairah, according to LSEG shipping data.
"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. He added that uncertainty over the outcome of negotiations and the durability of the peace deal is likely to keep shipping activity cautious.
Other factors that may limit export growth include tight regional balances, limited scope for a sharp rise in refinery runs, and approaching peak summer demand, Jain noted.
Iranian Exports Remain Constrained
Meanwhile, trading sources expect Iranian fuel oil trade to remain constrained despite the interim peace deal's 60-day US sanctions waiver, as banking and payment challenges are likely to continue acting as a key hurdle.
Implications for traders and analysts: The recovery in Strait of Hormuz flows is underway but remains fragile. The 20% month-on-month increase in exports offers near-term relief for tight global fuel oil supplies, particularly for HSFO used in power generation and shipping. However, volumes are still less than half the pre-war average, and the risk of renewed disruption persists. Traders should monitor US-Iran negotiations and the pace of Iraqi and Saudi diversions via alternative routes such as Syria's Baniyas and Saudi Arabia's Yanbu.
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