Why Asian Refiners Are Not Rushing Back to Gulf Crude Despite the Strait of Hormuz Reopening

The Strait of Hormuz is set to reopen under the U.S.-Iran interim deal, releasing a wave of stranded crude into global markets. Yet Asian refiners—the region's biggest buyers of Middle Eastern oil—are not rushing back to the bargaining table. Their hesitation is not a simple matter of supply availability; it is a calculated economic decision shaped by five powerful forces.

1. Shipping and Insurance Costs Remain Prohibitive

A cheap barrel of Gulf crude can quickly become an expensive delivered barrel. War-risk premiums for transiting the Strait of Hormuz are still running at roughly 30 times pre-conflict levels, at about 2.5–3% of hull value per passage, compared to 0.1–0.25% before the war . For a Very Large Crude Carrier (VLCC) valued at ~$200 million, that translates to millions of dollars per crossing . During the height of the crisis, freight rates surged to a record ~$424,000/day for the Middle East-to-China route . Even with the reopening, charter costs and passage risk are still being priced into every voyage .

2. Near-Term Supply Is Already Secured

India's state-run refiners have already lined up enough crude for the next two months and are in no rush to resume Middle East buying . Across Asia, buyers committed to cargoes arriving from June through August from non-Gulf suppliers like the US, West Africa, and Latin America, limiting the appetite for new spot bookings . This forward cover removes the desperation that might otherwise force quick re-entry.

3. A Stranded Barrel Backlog Creates a Buyers' Market

Around 31 supertankers holding an estimated 62 million barrels of crude are stuck inside the Persian Gulf and are preparing to exit once the waterway opens . With supply set to surge, Asian refiners expect Middle Eastern crude prices to fall further and are waiting for lower prices before committing . They are signalling that delivered crude cost matters more than headline availability .

4. Physical Recovery Will Take Months, Not Days

Analysts and industry executives warn that even with the deal, it will take months for flows through Hormuz to normalize due to mine-clearing, infrastructure repairs, and rebuilding contractual confidence . TotalEnergies' CEO Patrick Pouyanne said full restoration could take up to six months .

5. East Asian Competitors Are Positioning Differently

South Korea, which was hit hard by the blockade and tapped strategic reserves , is actively pursuing Venezuelan crude imports for the first time in over two decades as a diversification hedge . Meanwhile, East Asian refiners are already ramping up fuel exports, trying to front-run the market before Gulf flows fully return . This suggests the hesitation is not universal—some players see the reopening as an opportunity to sell products into the supply gap, while others are diversifying sources rather than simply waiting.

The Bottom Line

For Asian refiners, the math is simple: waiting pays. With millions of barrels trapped in the Gulf, locked-in alternative supplies, and insurance costs that erase any price advantage, the smartest move is to let the market settle first. Gulf producers may need to offer discounts, flexible terms, or freight support to win back these cautious buyers .