Only one oil tanker passed! The Strait of Hormuz is nearly "cut off," and Middle Eastern oil-producing countries have already begun to reduce production.

Only one oil tanker passed! The Strait of Hormuz is nearly "cut off," and Middle Eastern oil-producing countries have already begun to reduce production.

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The oil passage of the Strait of Hormuz is on the verge of paralysis. According to the latest tracking data from Morgan Stanley, only one oil tanker passed through this globally crucial energy chokepoint on March 3, a more than 95% plunge from normal levels. Iraq has been forced to cut production, Asian refiners are beginning to reduce operating loads, and the global energy market is bearing the brunt of this rare disruption.

According to Chase Wind Trading Desk, Morgan Stanley's second daily tracking report for the Strait of Hormuz released on March 3 shows that as of dusk UK time on the day, only one tanker completed the passage, compared with two on Monday, while typically around 35 crude oil, refined oil, and liquefied natural gas vessels pass through daily.

Meanwhile, Iraq is reportedly cutting about 1.2 million barrels per day of production, as its inventories have reached critical levels. Previously, Morgan Stanley's latest calculations revealed that if the strait is fully blocked, the storage capacities of the seven major oil-producing countries in the Middle East could only support 25 days, after which they would be forced to halt production entirely.

The market's price response has been swift and dramatic. Europe's benchmark TTF natural gas prices have surged more than 65% over the past two trading days, returning above 50 euros/MWh; global diesel and fuel oil crack spreads have widened sharply; tanker freight rates for the U.S.-China route jumped from $79/ton on Monday to $100/ton. The impact of this supply disruption has spread from the Middle East to the global commodity markets, causing investors to be highly vigilant about the stability of energy supply chains.

Transit Volumes Plunge, New Loadings Drop to Zero

Morgan Stanley's tracking data reveals a near standstill. The report states that at the time of writing, there were no crude oil, liquefied petroleum gas, or liquefied natural gas tankers passing through the Strait of Hormuz.

Looking at loading data, the situation is equally severe—comparison charts show that recently, the new crude oil loadings from oil-producing areas behind the Strait of Hormuz destined for major importing countries have dropped to zero, while previously loaded vessels are still gradually arriving at ports, creating a sharp contrast.

At the infrastructure level, new signs of damage have emerged. Reports say that the oil storage facilities at Fujairah port in the UAE and the Musaffah fuel terminal have been hit by drone strikes, and Oman’s Duqm port has also been affected. These attacks directly threaten the Gulf region's storage and transportation capacity, further intensifying market concerns about continued supply disruptions.

Refinery Load Reductions, Freight and Gas Prices Soar

Supply-side shocks have rapidly transmitted downstream. According to Argus, Asian refiners are proactively cutting processing volumes due to shortages in crude supply, with one Singapore refinery’s operating rate dropping from 85% to 60%. This adjustment means the output of refined oil will shrink accordingly, directly pressuring regional fuel supplies in Asia.

The freight market response has been similarly intense. Morgan Stanley's data shows that even on routes outside the Middle East, freight rates climbed further on Tuesday, with freight rates for the U.S.-China route jumping more than 26% in a single day.

For natural gas prices, TTF’s two-day cumulative increase reached 65%, with price action concentrated in near-month contracts, indicating the market views the disruption as a short-term shock for now, but there are no clear expectations on how quickly the situation can be resolved. Morgan Stanley said it will continue to publish daily tracking reports this week to address this unusual supply interruption.

 

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