MW Think Russian oil will calm the Iran conflict's supply panic? Here's what the math reveals.
By Myra P. Saefong
Russian oil can reach markets fast. The Iran conflict's supply fears, however, are much bigger.
The U.S. will temporarily allow Russia to sell the oil its has already loaded onto tankers at sea.
The U.S. will temporarily allow Russia to sell oil that has already been loaded onto tankers at sea, freeing up 120 million to 130 million barrels of crude in an effort to calm markets rattled by the weeks-long conflict in Iran.
The move could bring some barrels back into circulation relatively quickly as one of the world's major maritime passageways, the Strait of Hormuz, remains effectively shut.
However, analysts say the amount of oil involved in the brief sanction reprieve is insufficient to meaningfully ease the supply fears in the Persian Gulf that have seized global markets for the past two weeks.
'In global oil terms, that's just over a day of worldwide demand.'Nigel Green, deVere Group
"In global oil terms, that's just over a day of worldwide demand," Nigel Green, chief executive officer of deVere Group told MarketWatch. "As such, it's not a structural shift in supply," he said of the Russian oil that would be brought online.
Still, what makes the Russian oil an intriguing development is speed. "These are barrels that already exist and in many cases are already at sea," he said, adding that the moment legal restrictions eased, they can reach refineries in days or weeks.
The U.S. imposed sanctions on oil from Russia after Moscow's invasion of Ukraine in late February 2022. Late Thursday, the U.S. Treasury Department said it would authorize until April 11 the delivery and sale of crude and petroleum products from Russia that have already been loaded onto vessels in the sea.
The sanctions relief will "rent some time," and ease some of the physical market stress the global oil market has been under right now, said Tyler Richey, co-editor at Sevens Report Research. It will not, however, "buy an end to the geopolitical fear bid in energy markets, he told MarketWatch.
"Only the reopening of the Strait of Hormuz will truly eliminate the currently historic supply-side bid" that's been leading to higher oil prices, he said.
Read: Trump is scrambling to quell the rise of $100 oil. But the market keeps circling one cure.
The U.S. and Israel launched coordinated military strikes on Iran on Feb. 28 has wreaked havoc in the oil-rich Middle East. The flow of oil and cargo ships in the Strait of Hormuz was been effectively halted.
Cargoes that departed the Gulf before the strait's closure are still arriving at their destinations, strategists at J.P. Morgan wrote in a note Friday, but new shipments have largely stopped. So the pipeline of incoming supplies is steadily running dry and is likely to be exhausted by the end of this week for Asia-bound shipments, and by the end of next week for shipments to Europe, they said.
Production has been cut in the region because of a shortage of storage space and those reductions have climbed to 6.5 million barrels per day, the strategists said. That number is likely to approach 12 million barrels per day by the end of next week - "making the deficit highly visible across physical markets."
An estimated 20 million barrel of oil transits through the waterway each day, and the loss of that amount of barrels has contributed to sharp climb in prices for the commodity. So far this month, U.S. benchmark West Texas Intermediate crude prices (CL.1) have climbed by 47%, as of Friday, while global benchmark Brent (BRN00) has seen prices rise by 42%, according to Dow Jones Market Data.
To help address a potential supply shortage, the International Energy Agency announced Wednesday the release of 400 million barrels of oil from emergency reserves - the largest ever. As art of that, the U.S. said its Department of Energy will unleash 172 million barrels from the Strategic Petroleum Reserve.
Read: Trump is tapping America's Strategic Petroleum Reserve to fight rising gasoline prices. How much oil is left in it now?
The U.S. is also considering issuing a waiver to the Jones Act, a law mandating that only U.S.-made ships may transport cargo between domestic ports.
Read: Trump's next move to stop oil's surge may involve a shipping law from 1920
Until shipments begin moving freely through the Persian Gulf again, analysts say the global oil market will remain defined by the barrels it's missing rather than the ones policymakers are trying to free up.
-Myra P. Saefong
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(END) Dow Jones Newswires
March 13, 2026 16:21 ET (20:21 GMT)
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