Hormuz Throughput Crash Forces Crude Rerouting, Lifting Malaysia's Energy Trade Role
With Strait of Hormuz flows down to below 2 million bpd, Asian refiners are scrambling to reroute crude supply, sharpening focus on Southeast Asian alternatives.
Throughput in the Strait of Hormuz has fallen to below 2 million barrels per day since US-Israel-Iran fighting resumed on August 30 (2026-08-30), down from 8 to 9 million bpd in the week before hostilities restarted, according to Claudio Galimberti, chief economist at Rystad Energy. ICE Brent crude front-month held at $100.66 a barrel as of Wednesday (2026-09-09) 13:10 UTC, sustaining the level first crossed on Wednesday (2026-09-02).7
The strait carries around one-fifth of the world's daily oil and liquefied natural gas supply, according to Reuters, with Saudi Arabia, Iraq and Kuwait relying on it as their primary export corridor. A drop to below 2 million bpd from 8 to 9 million bpd is a supply shock that alternative routes cannot readily absorb.1
Saudi Aramco is in active negotiations with two Asian oil refiners about rerouting crude shipments around the Cape of Good Hope, cryptobriefing.com reported. That detour adds weeks of transit time and materially higher freight costs. Brent had climbed above $98 a barrel by the time of cryptobriefing.com's July 23 (2026-07-23) report, up more than 33 percent in a single month from earlier lows.5
The SUMED pipeline — running from Ain Sokhna on the Red Sea to Sidi Kerir on the Mediterranean — can handle around 2.5 million barrels per day at full capacity, a fraction of Hormuz's pre-crisis volumes.5
The IEA said last month it expected global oil supply to fall by 4.3 million bpd this year, about 4 percent of global production, Firstpost reported. The agency is also planning to recommend releasing 400 million barrels of strategic reserves, which would be the largest such intervention in IEA history, according to Reuters.7,1
Malaysia's own production trend cuts against the opportunity the disruption has opened. The country's crude and condensate output fell 5.5 percent from a year earlier to 43 million barrels in the first quarter of 2026, the Department of Statistics Malaysia said on Friday (2026-06-05). Output has been declining even as the case for non-Gulf supply has strengthened sharply.4
But buyers are placing increasing weight on geography and supply chain resilience over volume alone. Oilprice.com reported in May (2026-05-22) that traders and governments are prioritizing redundancy over efficiency in procurement, with the Hormuz crisis fundamentally altering how Asian buyers assess energy security. Malaysia's position outside the Persian Gulf, its existing export infrastructure and its function as a regional crude trading hub are all more valuable than they were twelve months ago.2
The demand dislocation is visible at the refinery gate. Japan's crude oil imports fell 66 percent year-on-year as conflict fears disrupted Middle East flows, according to Japan's Ministry of Economy, Trade and Industry data. Refiners across Northeast Asia are competing for replacement barrels from non-Gulf sources, and Malaysian crude grades are among those drawing increased attention.3
Any diplomatic breakthrough could unwind these trade shifts rapidly. When the United States and Iran paused fighting on Monday (2026-07-27), ICE Brent crude front-month dropped more than 8 percent to around $89 a barrel for September delivery and NYMEX WTI crude fell more than 7 percent to roughly $82 a barrel, Hindustan Times reported. Flows through Hormuz recovered to near pre-conflict levels during that ceasefire window before fighting resumed on August 30 (2026-08-30).6
ICE Brent crude front-month stood at $100.66 a barrel on Wednesday (2026-09-09). The IEA reserve release, if approved at the scale Reuters reported, could act as a near-term price ceiling if fighting eases or ceasefire talks resume. For Malaysian crude sellers and the Asian refiners rerouting supply chains around the cape, the trade economics that look attractive at triple-digit oil can reset sharply on a single announcement from Tehran or Washington.7,1,6