Middle East Oil Disruptions Spark Global Trade Shifts

Escalating tensions involving Iran have disrupted oil supplies from the Middle East, forcing major buyers to seek alternative sources and rebuild their supply chains. This shift has led to a more dispersed network of global trade, with oil importers choosing longer and more expensive routes to reduce dependence on individual straits, canals, and regions.

Japan, one of the world's largest oil importers, is looking for oil farther from the Middle East. Before the US-Israeli war against Iran and the decline in tanker traffic through the Strait of Hormuz, more than 90% of Japan's oil came from the region. However, after the conflict disrupted exports from the Persian Gulf countries in late February, flows of Middle Eastern oil fell sharply.

The shortage led Japanese companies to buy more oil from other regions, particularly North America. Between March and June, Japan's oil imports from the United States exceeded 4.5 million tonnes, compared with less than 1 million tonnes during the same period in 2025. This marked a 400% year-on-year increase in US supplies.

South Korea and India are also reassessing their geography of purchases, increasing the share of supplies from the Americas and Africa as flows from the Middle East decline. China, the world's largest buyer of crude oil, is relying heavily on strategic reserves to mitigate the effects of the conflict involving Iran, but importers are likely to step up purchases toward the end of 2026.