We are now 16 days into the Iran conflict, and the tanker flow in the Strait of Hormuz remains nonexistent. Production shut-in is now ~8.16 million b/d. If tanker flows don’t return to normal by the end of March, the cumulative production loss will be 208.5 million bbls.
Source: HFIR Estimate
We estimate that production shut-in will be maxed out from Iraq, Saudi Arabia, UAE, and Kuwait at ~12.16 million b/d.
If tanker flows don’t return to normal by the end of April, another 364.8 million bbls will be lost.
Source: HFIR Estimate
Cumulative production lost will be 573.3 million bbls.
Coming into the conflict, these were the figures you should know:
Excess oil-on-water - 165 million bbls
Excess onshore oil inventories excluding China - 100 million bbls
SPR release - 400 million bbls
The cumulative cushion is 665 million bbls. China will be hoarding crude for as long as possible, as the current closure is a direct threat to national security.
Please keep in mind that when you are comparing the two figures, we are not comparing “flow” disruption to the “cushion”. This mental exercise illustrates the long-term impact on the global oil market.