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The Rise of Brazilian Oil China and India are increasingly turning to Brazil to make up for lost oil supplies as the fallout from the US-Israel war on Iran continues to disrupt energy trade through the Strait of Hormuz. With oil harder to access and Russian supply largely constrained by sanctions, Asian buyers are scrambling for crude from suppliers seen as safer and more reliable. Impact on Brazil's Oil Exports Brazil, which is already one of the world’s biggest oil exporters, has emerged as one of the clearest beneficiaries. Sumit Ritolia, a specialist in modelling refinery and oil markets at Kpler, told Al Jazeera: “The disruption caused by the Iran war and the closure of the Strait of Hormuz has increased the importance of Brazil as a marginal crude supplier to Asia.” The Data Analysis Asian countries imported about 1.2 million barrels per day (bpd) of crude from Brazil in 2025, according to data supplied to Al Jazeera by trade intelligence firm Kpler. That rose to roughly 1.8 million bpd between January and May this year, highlighting Brazil’s growing role in Asia’s efforts to diversify away from the Gulf. Brazil's oil production increased to 4.06 million bpd between January and May, up from 3.77 million bpd in 2025. More than 60 percent of Petrobras exports are now heading to China. The Impact Analysis The shift is beginning to benefit Brazil’s economy. The OECD reported in March that rising crude prices are expected to support Brazil’s trade balance, while the country’s Ministry of Finance estimates that Brent crude reaching $100 per barrel would generate revenue equivalent to almost 1 percent of gross domestic product (GDP) above current 2026 budget projections. The Prediction “Brazil helps diversify crude imports for Asian countries, but its role as an alternative supplier remains capped by Brazil’s overall crude supply growth, freight economics, and competition from buyers in Europe and the US,” Ritolia said. “As a result, Brazil is a meaningful marginal alternative for Asia during periods of supply disruption, but it is unlikely to become a structural replacement for Middle Eastern crude in the long term.”

The LeadTwo Chinese oil tankers have exited the strategically vital Strait of Hormuz after waiting in the Gulf for more than two months, carrying approximately 4 million barrels of crude oil. This movement occurs as United States President Donald Trump and Vice President JD Vance publicly claim that a deal to end the US-Israel war on Iran is imminent, suggesting potential de-escalation in the region.The Strategic Movement of Chinese TankersShipping data from LSEG and Kpler confirmed that the Chinese-flagged Yuan Gui Yang and Hong Kong-flagged Ocean Lily have navigated out of the waterway. The Yuan Gui Yang loaded 2 million barrels of Iraqi Basrah crude on February 27, a day before the US-Israel war on Iran commenced, while the Ocean Lily loaded 1 million barrels each of Qatari al-Shaheen and Iraqi Basrah crude between late February and early March.South Korean Foreign Minister Cho Hyun also reported that a Korean crude vessel was passing through the Strait on Wednesday, indicating a potential return to normal shipping operations in the region.The Diplomatic Signals from WashingtonThe tankers' departure coincided with significant diplomatic pronouncements from US officials. President Trump told US lawmakers that the war on Iran will end "very quickly" and "hopefully … in a very nice manner." Vice President JD Vance further reinforced this message at a White House news briefing, stating that Tehran-Washington negotiations are "in a pretty good spot here.""There's a lot of back-and-forth, a lot of good progress is being made, but we're just going to keep on working at it," Vance said. These statements come after Trump had previously threatened military action against Iran, giving the country "two to three days" to make a deal and claiming he had been an hour away from ordering an attack before postponing it.The Oil Market ResponseThe positive comments from the White House led to a brief relaxation in oil prices, with Brent crude, the international benchmark, falling to as low as $110.16 a barrel. However, energy experts warn that prices are likely to remain elevated even if Washington and Tehran reach a deal."Prices are likely to still exhibit some upside potential even if a deal is concluded, given that supply will likely not return to pre-war levels immediately," Emril Jamil, a senior oil research analyst at LSEG, told Reuters.The economic and political fallout from the US blockade on the Strait of Hormuz has reverberated globally, with Brent crude hitting its highest price since June 2022 last month due to fears of prolonged supply disruption.Global Economic ImplicationsThe United Nations has cut global growth forecasts to 2.5 percent for this year, down from an estimated 3 percent last year, citing higher energy costs and weaker trade as key factors.In its latest World Economic Situation and Prospects Report, the UN warned that low-income families in developing countries bear the heaviest burden "as higher food and energy prices take up a larger share of their spending and rising costs outpace wages." The prolonged disruption of oil supplies through the Strait of Hormuz continues to have far-reaching consequences for the global economy.

The US Sanctions Waiver Extension The United States has announced another 30-day extension of a sanctions waiver for countries buying Russian oil and petroleum products currently already loaded on tankers at sea. This decision, announced by Treasury Secretary Scott Bessent, will last until June 17 and aims to provide the most vulnerable nations with the ability to temporarily access Russian oil currently stranded at sea. The Impact on Global Energy Markets The extension will provide additional flexibility, and the US will work with these nations to provide specific licenses as needed. This general license will help stabilize the physical crude market and ensure oil reaches the most energy-vulnerable countries. It will also help reroute existing supply to countries most in need by reducing China’s ability to stockpile discounted oil. The Data Analysis According to analytics firm Kpler, there is currently about 113 million barrels of oil or liquid volume (Mbbl) of Russian crude and condensate loaded on ships and at sea. Russian crude oil in transit is approximately 106Mbbls. Floating storage of Russian crude has declined significantly since the start of the year from a high of about 19Mbbls in late January to 7Mbbls now. The Impact Analysis The US waiver extension works in Moscow’s favor as it allows for more trade over a shorter distance. Despite US President Donald Trump claiming to have extracted a promise from Indian Prime Minister Narendra Modi to stop buying Russian oil, India and China remain consistent purchasers of Russian oil. In fact, Russian oil exports to India stood at more than 2 million bpd last month, while exports to China remained strong at 1.05 million bpd. The Prediction With the sanctions waiver now extended, Russian oil exports to other countries are likely to grow. However, experts believe that the impact of the waiver on prices will be limited, given that it only applies to oil already loaded on ships before mid-April. As a result, oil prices are likely to continue rising for as long as traffic through the Strait of Hormuz remains disrupted.

The Lead China has ordered its citizens and companies not to comply with United States sanctions against five Chinese refineries accused of handling Iranian oil, deploying a law intended to counteract 'extra-territorial' punitive measures for the first time. Understanding China's Anti-Sanctions Order China's Ministry of Commerce issued the 'prohibition order' after the US Department of the Treasury last month announced sanctions targeting one of China's biggest independently run 'teapot' refineries. The ministry stipulated that the US sanctions on Hengli Petrochemical (Dalian) refinery and four other refineries 'shall not be recognised, enforced or complied with'. The sanctions were deemed to 'improperly' restrict normal trade and business activities in violation of international law. The Data Analysis China is Iran's largest trade partner and by far the biggest buyer of Iranian oil. Chinese buyers received more than 80 percent of Iran's oil shipments in 2025, according to market intelligence firm Kpler. The US Treasury Department imposed the latest sanctions after accusing Hengli of generating hundreds of millions of dollars in revenue for Iran's military via crude oil purchases. The Impact Analysis The move signals that Beijing is taking a more assertive approach to countering sanctions. Companies risk facing the wrath of Washington or Beijing, depending on which measures they comply with. This potentially puts them in a difficult position, with firms likely to approach the competing pressures based on their respective levels of exposure to the US and Chinese markets. The Prediction China's anti-sanctions law could be seen as a model for other countries seeking to counter US pressure. However, it remains to be seen whether other countries will follow China's lead. The law's most significant long-term effect could be to inspire other powers such as Russia and the European Union to adopt similar measures.

The UK's Jet Fuel Supply Crisis British refineries have been asked to maximise jet fuel supply as part of government contingency planning, amid growing fears the Iran war will force planes to be grounded. Government Response and Monitoring Energy minister Michael Shanks said the government is closely monitoring UK jet fuel stocks and working with airlines, airports, fuel suppliers and other governments, as carriers face rocketing fuel costs as a result of the conflict. Impact of the Iran War on Fuel Supply Normal flows of fossil fuels from the Gulf have effectively been at a standstill since the war broke out, after the de facto closure of the important shipping channel, the strait of Hormuz, through which a fifth of the world’s oil and gas flows. Current Status of UK Refineries There are now only four remaining refineries in the UK, after closures at the Grangemouth and Lindsey refineries in 2025. The remaining UK refineries are: Fawley in Hampshire owned by ExxonMobil; Humber in Lincolnshire owned by Phillips 66; Valero’s Pembroke refinery in Wales; and Essar’s Stanlow site in Essex. Global Jet Fuel Shipments It came as global jet fuel shipments fell to the lowest recorded level last week. Just under 2.3m tonnes of jet fuel and kerosene were transported on ships in the seven days to 26 April, according to initial analysis by data company Kpler, which first began tracking shipments in 2017. Airline Response and Future Outlook Airlines have insisted there are now no supply problems expected during their typical four-to-six week horizon, although some carriers have already announced flight cancellations, and have been lobbying for government help amid rising fuel prices and a possible supply crisis.

US Naval Blockade Threatens Iran’s Oil Storage CapacityThe United States has maintained a naval blockade of Iranian ports and the Strait of Hormuz since April 13, 2026. The move aims to choke Iran’s oil revenues by preventing crude exports, forcing the country to store the oil it continues to produce.Rapid Rise in Iran’s Crude Inventories and Storage UtilizationFrom April 13 to April 21, satellite data showed an increase of over 6 million barrels in storage.By April 20, Kharg Island’s tanks were about 74 % full, having taken on roughly 3 million barrels in the preceding week.Iran’s domestic refineries can process 2.6 million barrels per day (bpd), while current export levels are 1.71 million bpd (April) versus 1.84 million bpd (March).Floating tank capacity adds another 127 million barrels of storage.Industry practice keeps storage below 80 % for safety, but Iran has previously exceeded this limit, reaching near 90 % in April 2020.Potential Production Cuts and Global Oil Market ImplicationsAnalysts from Kpler and the Columbia Center on Global Energy Policy (CGEP) warn that continued blockage could force Iran to trim output. While on‑shore storage still covers roughly 20 days of production, a gradual reduction is expected within the next week, with a higher chance of acceleration into May.Cutting production carries technical risks, such as reservoir pressure loss and increased water or gas intrusion, which could raise future extraction costs. Moreover, a production halt would shrink Iran’s export revenues, though the country could still earn from oil already en route on tankers.Outlook: When Might Iran Reduce Output and How Markets May ReactGiven the current storage trajectory, a decisive production cut is more likely a strategic choice than an absolute necessity. If Iran opts for an aggressive shutdown, it would preserve spare storage for a smoother restart once the blockade eases, mitigating long‑term supply disruptions.Global oil prices could experience volatility as markets weigh the risk of reduced Iranian supply against the potential for alternative sources to fill the gap. Investors should monitor US policy signals and any diplomatic developments that could alter the blockade’s duration.

US Treasury Targets Hengli Petrochemical’s Dalian FacilityThe U.S. Treasury Department announced sanctions on Hengli Petrochemical (Dalian) Refinery, China’s second‑largest independent “teapot” refinery, accusing it of purchasing hundreds of millions of dollars worth of Iranian crude. The action comes ahead of potential diplomatic talks aimed at ending the U.S.–Israel conflict with Iran.Sanctions Scope and Financial FiguresTargeted entity: Hengli Petrochemical (Dalian) RefineryAlleged purchases: hundreds of millions of dollars in Iranian oilAdditional measures: sanctions on ~40 shipping firms and vessels linked to Iran’s “shadow fleet”The Treasury highlighted that these transactions generate significant revenue for the Iranian military, intensifying the geopolitical stakes.Implications for China’s Independent ‘Teapot’ RefineriesChina’s “teapot” refineries—small, privately owned plants mainly in Shandong—have become crucial conduits for discounted Iranian and Russian oil, allowing state‑owned giants to stay insulated from politically risky trades. The new sanctions threaten:Revenue streams for the refineriesSupply chains that rely on covert financing and vessel networksChina’s broader strategy of diversifying oil imports, which currently sees >50% of its oil from the Middle East and >80% of Iran’s shipped oil purchased by Chinese firms (Kpler data).U.S. Treasury Secretary Scott Bessent warned that any person or vessel facilitating these flows “risks exposure to U.S. sanctions.”Broader Market Impact and Geopolitical TensionThe sanctions add another layer of pressure on an oil market already strained by the U.S.–Israel war on Iran and a U.S. naval blockade of Iranian ports (in place since April 13). Analysts at Bruegel note that teapot refineries face “high replacement prices” as global tensions drive up costs, potentially reducing China’s ability to stockpile cheap oil.Looking Ahead: Future of Sino‑Iran Oil TradeWith the U.S. signaling continued targeting of “the network of vessels, intermediaries, and buyers” that move Iranian oil, Chinese independent refiners may need to:Seek alternative feedstocks to mitigate sanction riskIncrease compliance and transparency in trade financingPotentially align more closely with state‑owned enterprises to shield operationsShould diplomatic efforts succeed, the intensity of sanctions could ease, but the precedent set by this action suggests a prolonged period of heightened scrutiny for China’s “teapot” sector.

The Escalation in the Strait: A Shift from Indirect to Direct ActionOn April 22, Iran escalated its naval campaign in the Strait of Hormuz by capturing two foreign container ships and firing on a third. The captured vessels included the Panama-flagged MSC Francesca, which was intercepted near Sri Lanka, and the Greek-owned, Liberia-flagged Epaminondas, which was fired upon northwest of Oman. A third ship, the Euphoria, was also targeted but sustained no damage. This marks the first time since the war began that Iran has attacked and seized ships not linked to the US or Israel. The move comes in direct response to the US military's capture of the Iranian-flagged vessel Touska on April 20, with Iran accusing Washington of "piracy" and the Pentagon maintaining that international waters are not a refuge for sanctioned vessels.Economic Impact: Iran's Oil Revenue Surge Amid ConflictDespite the heightened military tensions, Iran has managed to increase its oil export revenues significantly. According to trade intelligence firm Kpler, Iran exported approximately 1.71 million barrels per day (bpd) in April, compared to an average of 1.68 million bpd in 2025. Over the past month, the country earned an estimated $4.97 billion from oil exports, representing a 40% increase compared to the $3.45 billion earned in early February before the war started. This financial resilience is bolstered by high global oil prices, which have frequently surpassed $100 per barrel, allowing Tehran to maintain economic pressure on its adversaries even while engaging in naval warfare.The Geopolitical Shift: From Toll Booths to Ship SeizuresThe conflict has evolved from a restrictive "toll booth" system to a full-scale blockade. Initially, Iran allowed vessels from "friendly" nations like China and India to pass through the strait provided they paid fees in yuan. However, following the US naval blockade of Iranian ports on April 13, Tehran has tightened its grip, refusing to allow any foreign ships to transit until the US blockade is lifted. This creates a dangerous deadlock where maritime traffic is trapped between two rival militaries controlling entry and exit points, threatening the flow of 20% of global oil and LNG supplies.The Brinkmanship Trap: What Happens Next in the Persian GulfAnalysts view Iran's capture of ships as a deliberate attempt to raise the stakes and pressure the Trump administration into lifting the naval blockade. Ali Vaez of the International Crisis Group describes the situation as "mutual brinkmanship," where neither side can afford to blink without appearing weak. While a ceasefire is technically in place, the seizure of commercial vessels by Iran and the detention of Iranian ships by the US indicate that a wider regional war remains a real possibility. The strategic goal for Tehran appears to be forcing a renegotiation of the ceasefire terms, but the risk of miscalculation at sea remains dangerously high.

On the first day of the US blockade on Iranian ports, at least three vessels, including two US-sanctioned tankers, successfully transited the Strait of Hormuz into the Gulf. According to shipping data, these vessels were not bound for Iranian ports, thus avoiding the impact of the blockade.A Panama-flagged medium-range tanker, Peace Gulf, was headed to Hamriyah port in the United Arab Emirates. Data from LSEG and Kpler showed that the vessel typically transports Iranian naphtha, a petrochemical feedstock, to other non-Iranian ports in the Middle East for export to Asia.Two US-sanctioned tankers, Murlikishan and Rich Starry, also navigated through the strait. Murlikishan, a handy tanker, was set to load fuel oil in Iraq on Thursday. The vessel, previously known as MKA, has a history of transporting Russian and Iranian oil. Rich Starry, a medium-range tanker carrying about 250,000 barrels of methanol, was the first sanctioned tanker to exit the Gulf since the blockade began. The tanker and its owner, Shanghai Xuanrun Shipping Co Ltd, were sanctioned by the US for dealing with Iran.The US blockade was announced by President Donald Trump on Sunday, following the collapse of peace talks between the US and Iran in Islamabad. The blockade aims to restrict Iran's control over the Strait of Hormuz, a critical route for global energy shipments. Iran had previously halted traffic through the strait in response to US-Israeli attacks, causing a spike in global gas and petrol prices.The Chinese Ministry of Foreign Affairs criticized the US move, calling it 'dangerous and irresponsible' and warning that it would escalate tensions and undermine the fragile ceasefire agreement. China, which imports over half of its oil from the Middle East, especially Iran, expressed concerns about the impact on oil supplies.Despite the blockade, there are still prospects for a diplomatic breakthrough. Trump indicated that Iran still has an opportunity to strike a deal, and a Pakistani official stated that the country is willing to host peace talks.