Oil traders are sounding alarms over a potential supply crunch due to renewed tensions in the Strait of Hormuz, which is currently largely shut down following a ceasefire breakdown in the US-Iran conflict. This situation threatens crude supplies just as stockpiles, previously used to mitigate crisis impacts, are dwindling. The International Energy Agency reports that its member countries have released nearly all of a planned 400 million barrels in emergency reserves. Oil prices are fluctuating, with Brent crude recently surging to $87 a barrel. Traders are concerned that prolonged closure of the strait could lead to significant shortages in oil supplies, similar to challenges faced previously, as inventories are at very low levels. There are apprehensions about tight markets for refined fuels, exacerbated by ongoing disruptions in Russian fuel supplies. The situation remains dynamic, with traders watching both the Gulf and Red Sea for further developments.

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Oil traders warn market is close to running on empty as Hormuz shuts again

Stockpiles that acted as shock absorbers early in Iran war are running low as key waterway closes once more

Several oil tankers anchored offshore in the Strait of Hormuz, with hazy hills in the background and choppy blue water in the foreground. The breakdown of the ceasefire has again largely shut the Strait of Hormuz, ending a brief surge of oil shipments through the waterway © AP

Verity Ratcliffe in London

PublishedJuly 15 2026

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Oil traders have warned that the latest flare-up of tensions in the Strait of Hormuz threatens a fresh crude supply crunch without the stockpiles that helped avert a wider economic crisis earlier in the US-Iran war.

This week’s breakdown of the ceasefire between Washington and Tehran has again largely shut the strait, ending a brief surge of shipments through the waterway that normally carries about a fifth of the world’s oil supplies.

The latest threat to Gulf crude exports comes after the International Energy Agency said on Friday that its member countries had released almost three-quarters of the planned 400mn-barrel emergency stock release that was announced in March, meaning there are only a few more weeks to go before those supplies to the market dry up.

“We’ve burned through all of the buffers we had. Everything,” said one trader. “All of that’s now gone,” he said.

Oil prices fell sharply after the ceasefire was first announced, dropping from about $100 a barrel to just above $70.

But in a sign of traders’ renewed anxiety, Brent crude surged above $87 on Tuesday, the highest level in more than a month. It traded at about $84.50 on Wednesday, up 11 per cent this week.

Line chart of Brent crude ($/barrel) showing oil prices have rebounded this month

During the four-month closure before last month’s US-Iran agreement to reopen the strait, governments in the west and Asia pulled almost every lever available to them to ensure the supply crunch did not undermine the world economy.

Western powers released record volumes of strategic oil reserves, China cut its oil imports in half and made its state-backed companies pull fuel from inventories, while the White House even let it be known the US could, in theory at least, intervene in futures markets if prices got out of hand.

The result was that Brent crude peaked at $126 a barrel in April, well below its all-time high, despite the IEA warning that the world was experiencing the worst supply disruption in history.

But traders said that if the renewed closure of the strait lasts for months, with some suspecting Iran wants to keep the pressure on US President Donald Trump ahead of the November midterm elections, it is not clear this time where the oil to make up the shortfall would come from.

Amrita Sen, director of market intelligence at Energy Aspects, said that going into the war, the oil market had roughly 400mn barrels of excess inventories, not including strategic reserves controlled by governments.

“Now we have close to nothing,” she said. “Market complacency around Hormuz flows is being severely tested.”

Motorists have already felt the pain at the pump, with prices for petrol and diesel rising faster — and falling more slowly — than crude oil since the war started.

Markets for refined fuels are now exceedingly tight, with additional disruptions affecting supplies from Russia, the world’s second-largest exporter of diesel, following a series of successful long-range Ukrainian drone strikes on its refining system.

The IEA on Friday warned of a potential petrol and diesel supply crunch, and wholesale diesel futures in Europe have risen 14 per cent this week.

While western powers had started to shun Russian fuel in the years following Moscow’s full-scale invasion of Ukraine, they are now having to compete for supplies with countries such as Turkey and Brazil that kept buying Russian diesel and now need to find alternatives.

Widespread warnings about airlines potentially running out of jet fuel, as countries such as Kuwait are big suppliers, have not materialised, with refiners optimising production and airlines curbing unprofitable flights.

But inventories are expected to draw down over the peak demand summer period and will prove challenging to rebuild ahead of the winter holidays.

Global oil inventories inched higher in June, according to the IEA, but the gains pale in comparison with drawdowns over the previous three months.

The post-ceasefire decline in oil prices came amid a temporary glut, as Gulf countries rushed to empty their brimming storage tanks, funnelling millions of barrels through Hormuz so that they could free up the space they needed in order to restore production.

Adnoc, the United Arab Emirates’ state oil company, sold via tender 84mn barrels alone, according to industry publication Argus, and was running a “shuttle” system through Hormuz to meet waiting supertankers still cautious about entering the Gulf.

But Adnoc’s shipping arm said two of these supertankers, each able to carry about 2mn barrels, were targeted on Tuesday morning by Iran while sailing through the strait. At least one seafarer was killed.

While Gulf suppliers have been able to reroute some of their exports — Saudi Arabia’s crude oil exports have risen to about 5mn barrels a day from its Red Sea ports, compared with the roughly 7mn b/d they sent through Hormuz before the war — others such as Iraq and Kuwait remain almost completely cut off.

“Ultimately, the market was pricing an optimistic flow trajectory that now is clearly not on the table, at least . . . not until we get another round of diplomacy,” said Joel Hancock, a senior commodities analyst at Natixis Bank.

At the same time, traders are monitoring the situation in the Red Sea following attacks by Yemen’s Houthis on Saudi Arabia after a strike on Sana’a international airport.

The Iran-backed group brought shipping through the Red Sea largely to a halt for more than a year starting in late 2023. A resumption of the Houthi campaign would close off southern access to Yanbu, Saudi Arabia’s only oil shipping route outside the Strait of Hormuz, rattling oil markets further.

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