With the US military initiating a blockade of Iran’s ports, it is anticipated that approximately two million barrels of Iranian oil per day will be excluded from global markets. This action is likely to tighten the global oil supply, leading to a further increase in petroleum product prices. Analysts suggest that a complete blockade of the Strait of Hormuz could also affect LPG supplies for India.
US President Donald Trump has declared that no ships will be allowed to pay Iran a toll for using the Strait of Hormuz. Although India has not paid any toll for its LPG ships passing through the strait, the unfolding situation remains uncertain. As tensions persist, the effectiveness of compensating for lost supplies through Strategic Petroleum Reserves may diminish, potentially resulting in higher oil prices.
Recent reports indicate that the US and Iran are contemplating further discussions following unsuccessful negotiations in Islamabad. Crude oil prices surged to $107 a barrel on Monday but dropped below $100/bbl on Tuesday amid renewed hopes for talks between the two nations. Brent crude oil prices have risen by 6.5% in the past week, nearing $98/bbl, with expectations of an increased war risk premium due to failed peace talks.
President Trump’s threat to completely block the Strait of Hormuz for all ships could exacerbate the oil supply situation, according to Nomura. Despite a decline in Saudi Arabia’s export volumes, the rise in oil prices has compensated for this, leading to a 4% year-on-year increase in oil revenues for the country in March. Saudi Arabia has reportedly achieved full oil flow capacity on its East-West pipeline, bypassing the Strait of Hormuz and connecting to the Red Sea.
Nomura projects a potential increase in Saudi Arabia’s export volumes to 5mbpd, compared to 4.4mbpd in March 2026, assuming 2mbpd is utilized by its western coast refineries. Iran has seen a significant boost in oil revenues, with estimates indicating a 36% year-on-year increase in March 2026 to $5.7 billion.
