Why Asian Oil Refiners Stopped Buying Middle Eastern Crude: The Hormuz Reopening, U.S.-Iran Deal, and Bearish Contango Reshape Global Markets

The Strait of Hormuz Reopening and the U.S.-Iran Deal

The U.S. and Iran reached a memorandum of understanding in mid-June to end hostilities and reopen the Strait of Hormuz, which had been effectively closed since March 2026 . Cargo shipments began moving again, unleashing a massive backlog: more than 60 million barrels of crude oil stranded in the Persian Gulf were ready to head to Asian markets . The physical oil market flipped rapidly — Brent crude fell roughly 13% from pre-deal levels, trading around $78.64/bbl by June 22 .

New Production from Kuwait, Iraq, and OPEC+

Multiple supply-side factors compounded the bearish shift:

• Kuwait began boosting output immediately after the Hormuz reopening, planning to exceed 2 million barrels per day within a week, with repairs to war-damaged infrastructure completed .
• OPEC+ approved a series of production increases: 206,000 bpd in April, then 188,000 bpd in June, and another 188,000 bpd for July 2026, with Saudi Arabia, Russia, Iraq, Kuwait, and others participating .
• Gulf producers also ramped up ship-to-ship transfers off the UAE and Oman in June, depressing spot differentials for Middle East crude to discounts .

Bearish Contango Market Structure

The combination of a sudden flood of supply from the Hormuz reopening, the backlog of 60+ million barrels, and OPEC+'s coordinated output increases pushed the crude futures curve into a bearish contango — where near-term prices are cheaper than later-dated contracts. This structure incentivizes storing oil rather than buying prompt cargoes, further depressing spot buying by refiners. Several crucial segments of the oil market experienced a surge in supply that flipped sentiment from war-driven scarcity to oversupply .

Brent Crude Forecasts and Implications Through Mid-2026

• Goldman Sachs Research projected that oil prices would fall further after the deal but were unlikely to return to pre-war levels immediately, forecasting Brent crude would average $75 per barrel next year .
• Fitch Ratings said the market was expected to swing back into oversupply after the Hormuz reopening, and that the disruption did not alter the longer-term bearish direction of the market .
• Brent crude hit a three-month low in mid-June, with prompt WTI futures dropping more than $4 in a single session .
• S&P Global noted that while physical crude markets would remain tight through summer, the normalization of flows would ease long-term supply fears .

Refinery Buying Behavior Outlook

Most Asian buyers have already committed to supply arriving from June through August and are now well-stocked . A U.S. temporary waiver on Iranian oil sanctions is not expected to attract broad Asian orders — only independent Chinese refineries are likely to be the primary purchasers of Iranian barrels . Refinery buying behavior through mid-2026 is expected to remain cautious and opportunistic, favoring spot cargoes at discounted differentials rather than term commitments, as the contango structure encourages waiting.