While flows through the strait had shown a gradual improvement in recent weeks, the situation dramatically changed in the last few days amid the escalation in the Iran war, leaving the outlook uncertain, chief operating officer, Refining & Marketing, told analysts after the company declared first-quarter results Friday.
“Some of the producers inside the Gulf, because they have been affected for so long, are willing to take some risks and bring the vessels out,” said Tuttagunta, adding: “So, we are keeping a watch on this. We will monitor and see how to effectively source oil.”
Of the roughly 100 million barrels a day of global oil production, some 12 million barrels were rendered unavailable due to the strait’s closure. But this did not send crude oil prices spiking because close to 5 million barrels a day of supply was released into the market through strategic reserves, particularly by International Energy Agency-member countries.
Tuttagunta said China has been notably absent from the import market throughout the crisis, only returning in a limited way so far. That absence helped keep prices in check.
RIL, however, cautioned that as countries eventually move to replenish stocks and resume normal import volumes, crude prices could find renewed support.
Broader oil demand has also softened, with several countries scaling back imports in response to elevated prices – though a rebound is expected next year as conditions normalise, RIL said. Despite the near-term uncertainty on crude sourcing, the company is confident of its outlook on refining margins, as several supply-side disruptions look durable, RIL added.