The Strait of Hormuz reopens with a surge in oil supply. Trump explicitly stated, "will not accept any shipping fees".

After the reopening of the Strait of Hormuz, the global oil market is experiencing a rapid reversal of supply and demand. The benchmark price of Brent crude oil fell below $75 per barrel this week, reaching this level for the first time since the outbreak of the Iran war. From Europe to Asia, buyers are being inundated with large quotes, as the market has quickly transitioned from extreme tightness a few months ago to the brink of oversupply. At the same time, according to CCTV News, on June 24th local time, US President Trump said that if the final US-Iran agreement includes any form of fees for shipping or maritime activities, this would be "unacceptable" to him. This is his most explicit statement on this issue so far. Supply Torrent: From extreme tightness to oversupply During the US-Iran conflict, the Strait of Hormuz was effectively blockaded. But according to Bloomberg, even before the US and Iran officially reached an agreement, a large amount of oil had quietly entered the market - oil tankers from the UAE and Kuwait passed through the strait in a "dark ship" manner. The International Energy Agency (IEA) estimates that UAE oil exports have recovered to nearly 85% of pre-war levels in early June before the agreement was signed. After the agreement was signed, the trapped oil was released at an accelerated pace. It was reported that before Iran issued 60-day sales permits to the United States, it had already shipped 30 million barrels of oil to Asia; Saudi Arabia's oil tanker giant Bahri and other companies that had not previously crossed the strait were also busy getting their backlog of tankers out of the strait. In recent weeks, the UAE has also sold about 60 million barrels of Persian Gulf oil through a series of tenders, continuing to push down Middle Eastern oil prices. The sudden increase in supply is looking for new outlets. At least six supertankers - carrying a total of 12 million barrels of oil from the UAE and Oman - are expected to arrive in Europe next month, when these goods would normally flow to Asia. The Dangote refinery in Nigeria also purchased UAE oil for the first time, reflecting the expanding supply opening up new markets. Oil Price Signal: Market has turned bearish The price signal clearly points to oversupply. Middle Eastern oil has switched to a contango structure since mid-June - where near-month prices are lower than far-month prices - a classic sign of abundant supply according to the market. The global Brent benchmark has also shown a similar shift this week. Daan Struyven, co-head of global commodities research at Goldman Sachs, explained in a Bloomberg TV interview, "Due to weak demand for Middle Eastern oil in Asia, buying oil now is cheaper than buying tomorrow. The reopening is progressing smoothly and quickly." The drop in Angolan oil is particularly pronounced. This medium-density crude oil, which is usually purchased in large quantities by China, is now trading at the largest discount in over ten years, at one point nearly $10/barrel below the global Brent benchmark. June Goh, a senior oil market analyst at Sparta Commodities, said, "Asian refineries have ample supplies until August, and the immediate barrels released by the Strait of Hormuz will only further increase excess inventories." Looking back, in early April this year, the world's most important physical crude oil benchmark, Dated Brent, exceeded $140 per barrel, reaching a historic record high, as global buyers panic-bought under the impact of war. Now, that same benchmark has dropped by almost half from its peak, falling to levels near those before the outbreak of war. Stockpile Vulnerability: Low reserves leave the market vulnerable Behind the flood of supply, there are also risks that cannot be ignored. US crude oil inventories (including strategic reserves) are currently at their lowest levels since 1984, with stocks at the Cushing delivery hub nearing operational lows. This has made US oil prices relatively strong compared to global prices, suppressing export demand. The IEA predicted last week that the global oil market would see significant oversupply by 2027. However, analysts also point out that solving this supply crisis will largely come at the cost of depleting stockpiles - which will eventually need to be replenished and may absorb some of the future excess supply. Trump Draws a Red Line: Shipping fees are "unacceptable" While supply is quickly being restored, the game over the future control of the Strait of Hormuz is heating up. After the US and Israel launched strikes against Iran, Iran claimed control over the strait, demanding that unapproved ships not be allowed to pass and requiring mandatory insurance - currently free, but there are widespread concerns that this will pave the way for future fees. Last week, Iran and Oman issued a joint statement announcing the start of negotiations to discuss the future management arrangements for the strait, including the issue of transit costs. In response, Trump directly stated at the White House, "This is unacceptable to me, because we have a lot of chips. If you do this for them, you have to do it for others. This will change the rules of the game." US Secretary of State Pompeo's wording was similarly strong: "I don't know of any country on earth that supports charging passage fees or charges for passage in the strait. This will not happen." Currently, the US-Iran memorandum of understanding explicitly excludes transit fees during the 60-day negotiation period. But the memorandum also leaves room for Oman, Iran, and other Gulf countries to jointly agree on new arrangements later on. This means that the issue of shipping fees is not over, but has been postponed to the next stage of negotiations. Global shipping industry and countries dependent on maritime trade have issued warnings, believing that once Iran is allowed to normalize fees, it will set a precedent for charging fees on other key international waterways.