Go With The Flow – Major Changes Disrupting Global Crude Oil and Refined Product Flows

Since early 2026, crude oil and refined product flows have been fundamentally rerouted both within the U.S. and around the world, with more changes still to come. The disruption of traffic through the Strait of Hormuz and sweeping changes in Venezuela's export strategy have dramatically reshaped trade flows in just six months. At the same time, refinery closures along the U.S. West Coast and new product pipelines headed there will send barrels down paths they haven’t traditionally traveled, reshaping both domestic and even global markets in the process. In today’s RBN blog, we look at these major shifts and what they could mean going forward.

Most recently in Waiting on the World to Change, we discussed our newly released Future of Fuels report, which forecasts lower global crude oil prices and a potential rollback in U.S. production in the next few years. Today’s blog offers another look at some of the key developments examined in our report. Three issues stand out. The Strait of Hormuz, Venezuela, and plans for a new wave of pipelines into the West Coast have already shaken up the market in a big way, with more changes to come; we'll tackle them one at a time.

As we’ve addressed in the RBN blogosphere, the Trump administration’s actions against Iran and the subsequent closure of the Strait of Hormuz seriously impacted global crude and product markets, not least of which is the massive Pacific Basin fuels market. With the strait now substantially blocked for almost all of the past four-plus months (see Eyes of the Ranger), large volumes of Persian Gulf crude oil, LPG, naphtha and refined products bound for Asia were suddenly stranded, forcing refiners in South Korea, India and elsewhere to cut runs and curb gasoline and jet fuel exports (see Two Out of Three Ain’t Bad). As of late July, with on-and-off hostilities between the U.S. and Iran, the strait’s outlook continues to be uncertain, with the picture seemingly changing by the day.

U.S. gasoline, diesel and jet fuel exports have helped plug part of the hole left by disrupted Persian Gulf flows. An interim deal between the U.S. and Iran in June briefly calmed tensions, and as Figure 1 below shows, crossings rebounded sharply later that month. But it did not last. Even during periods when the Strait of Hormuz has technically remained open, traffic has been sparse and vulnerable to disruption. The week of July 6 highlighted that reality and it’s been uncertain since that time (red bars to far right). Three tankers were struck by projectiles or drones on July 7, leading the U.S. to revoke the temporary license that had allowed Iranian oil sales under the cease-fire agreement and launch a new round of strikes against Iran. Vessel traffic quickly thinned out. Before the conflict, there were typically 130 to 135 ships daily, counting inbound and outbound traffic. On July 8, when President Trump declared the cease-fire over, Kpler recorded just 24 tanker transits, including inbound and outbound movements.