Stockdraws, sanction/replacement oil, demand loss in International Shipping News 23/04/2026 The US and Iran failed to reach a deal over the weekend, with the US announcing a complete blockade of Iranian ports, further undermining the already fragile two-week ceasefire starting from 8th April 2026. If enforced, vessel transits via the Strait of Hormuz could come to a complete halt, as Iran may strive itself to block any other transits. The situation remains volatile, and most vessel operators will likely take a wait-and-see approach and delay entry to the Middle East Gulf. With the Strait of Hormuz remaining mostly closed since the beginning of the conflict, about 17.7mbd of mainstream seaborne oil supplies (excluding those from Iran), based on 2025 averages, have been curtailed from the market. If Iranian oil supplies are also blocked by US military, that would add 1.8mbd to the current shortfall, affecting mainly China’s imports. The world is facing an unprecedented loss of oil supplies, and incremental liftings from elsewhere are insufficient to offset the shortfall. Over the past few weeks, seaborne weekly oil liftings from outside the Strait of Hormuz have risen rapidly in a bid to offset the shortfall from inside the Strait of Hormuz. In the week ended 12th April, volumes hit 11mbd above 2025 levels, meaning that there is still a net seaborne oil supply loss of 7.7mbd, roughly 7% of global oil demand, after accounting for redirection of crude flows via pipelines and higher product liftings due to increased refinery runs in the Atlantic Basin. It also needs to be seen whether this level is sustainable, while noting that stockdraws rather than production will be a significant contributor here, as illustrated by emerging intra-country crude flows in Japan from storage to refining sites. Supply shortage requires a mixture of solutions This shortage of oil supplies affects Asia the most as the 3 biggest oil exports via the Strait of Hormuz – crude, LPG, and naphtha – are meant for Asian refineries and petrochemical plants. Without these feedstocks, Asian countries will likely reduce their refinery utilisation rates or tap into inventory reserves. There are four ways to solve this supply shortage: 1) drawdown of oil inventories / strategic petroleum reserve (SPR) 2) replacement barrels from Atlantic Basin 3) absorption of sanctioned oil on water 4) substitution of oil products 5) demand destruction of oil products Policymakers across Asia have introduced measures to reduce oil consumption, such as four-day workweeks and work-from-home policies, thereby accelerating the decline in demand for gasoline and diesel. High pump prices across Asia, especially in Vietnam, have also limited consumers’ ability to undertake long-haul travel. Governments could also increase biofuel blending mandates, such as ethanol blending in gasoline and biodiesel blending in conventional diesel, to offset the oil shortage. In addition, alternative energy sources could be used for power generation instead of oil. Absorption of sanctioned oil at sea hit multi-year highs With the recent waiver of sanctions on Russian and Iranian oil at sea, Chinese and Indian refiners have ramped up purchases of Russian crude/condensate to fill the shortage of medium-sour barrels. The buying spree has led to a sharp drawdown in Russian crude on water of around 60mb since 1st March, with volumes falling to the three-year seasonal average (back to when the reshuffling of Russian flows