(Sept 8): Oil-product markets are flashing signs of tightness while crude’s outlook looks reasonable, with flows through the Strait of Hormuz picking up, according to Vitol Group CEO Russell Hardy.

Daily shipments through the waterway now total about 10 million barrels, of which nine million are crude, with products making up the rest, Hardy told the Asia Pacific Petroleum Conference by S&P Global Energy in Singapore. Still, that estimate is uncertain, with an exact figure hard to quantify, Hardy said.

“It’s pretty, pretty tight and inflexible out there as far as the market is concerned,” Hardy said on Tuesday, referring to fuel markets. Stockpiles are pretty much at the bottom, he added.

Global oil markets have been rocked this year by the war between the US and Iran, as well as continued hostilities between Russia and Ukraine, which have seen Kyiv launch wave after wave of drone attacks on its foe’s refineries. While oil futures have jumped about 60% in 2026, product markets have surged far harder, partly as Moscow has imposed a ban on diesel exports.

In the US, while most refineries have been running flat out, nationwide holdings of distillates — a category that includes diesel — are at their lowest level for this time of year in at least a quarter of a century. At the same time, the average retail price of diesel at the pump has rallied to a record.

Global oil-product stockpiles are “still drawing", Hardy told the conference. “We’re still not running enough refining capacity to prevent those draws and we keep eating into the surplus that exists around the world.”

In the Middle East, traders’ focus remains on the volumes that are getting shipped through Hormuz, even as the status of the waterway remains contested between Washington and Tehran and vessel attacks continue. Roughly seven million barrels a day of crude and refined fuels are crossing the chokepoint, Macquarie Group Ltd said Monday. That compares with pre-war levels of about 20 million.

For Vitol, the Hormuz flows estimate of 10 million barrels “isn’t guaranteed to get out every day,” Hardy said. “It depends on ships, it depends on insurance, it depends on captains and crew being in to do that difficult job.”

While that volume is “sufficient, probably, to keep the available refining capacity running,” Hardy said, the loss of refined-product exports from the Middle East and Russia — seen at two million barrels a day from each region — has pushed fuel markets into a deeper crisis than crude.

“We came into this shock with very little flex in the refining system,” Mark Senn, senior vice president of global trading at US processor Phillips 66, told the conference. The US system is running flat-out, he said.

On import flows, there’s likely to be some upside in China’s crude demand from an expected pickup over the final months of this year, when usage typically rises due to winter, Vitol’s Hardy said.

China came into the Iran war with a high buffer of crude stockpiles and that allowed the top importer to curb inflows by five million to six million barrels a day compared with last year — a figure Hardy said was “unsustainable”.

China’s crude-oil imports rose in August compared with July as cargoes from the Persian Gulf crept higher and refiners increased purchases from other sources, according to data on Tuesday. Still, shipments remain almost a quarter below the level seen in August of last year.

Uploaded by Arion Yeow