The Race To Empty: SocGen Breaks Down Which Countries Will Hit The Oil Wall First?

Despite anecdotal evidence of some tankers crossing, estimated flows through the Strait of Hormuz continue to fall fast.

SocGen estimates that flows are roughly 0.5 mb/d, meaning oil passing through the Strait is down by 19.5 mb/d relative to average flows. Accounting for redirection through regional pipes leaves around 17 mb/d of stranded oil.

A recent report from Reuters (see here) says Iran has granted passage to two India-flagged LPG carriers, with the Shivalik reportedly transiting under escort from the Indian Navy. Other outlets also indicate that Tehran is selectively allowing certain ships to move through the Strait (see here). Meanwhile, shut-ins are accelerating rapidly, already nearing 7 mb/d and potentially pushing into double-digit territory within days.

Additionally, with exports stranded and limited pipeline-rerouting options, almost 2mb/d of Gulf refining capacity has been taken offline due to the constraints but also due to attacks on the infrastructure tightening global product balances resulting in spiking prices.

Given all that background, the big question is simple: which countries hit the oil wall first?

SocGen's Commodity Research team believes Europe remains relatively insulated for now thanks to ongoing draws on its product inventories.

The region holds nearly 70 million barrels of jet fuel across commercial and strategic tanks, enough to offset up to a 300 kb/d shortfall in Gulf-sourced supply for several months and soften the initial impact. Even so, pressure is mounting rapidly across middle distillates—most notably diesel and jet—given the Gulf’s role as a major supplier to Europe, Africa and of course Asia. Tightness is also emerging in naphtha, which is vital for Northeast Asia’s petrochemical sector, and reduced LPG shipments from the UAE and Qatar are already lifting propane markets. As a result, the system is being forced to rebalance through higher product prices.

A key issue now is how long the major importers can keep their fuel systems running before more severe shortfalls emerge.

Each country is drawing on a mix of strategic reserves, commercial stocks and, where available, barrels held in floating storage — but the level of protection differs sharply across the region.

However, Asia faces more significant problems as the region imported over 13mb/d through the Strait of Hormuz – equally roughly 50% of all the regions imports with China, India, South Korea and Japan the most significant buyers.

China has close to 300 days of cover against a disruption tied to a Strait of Hormuz shutdown, whereas India’s total buffer is only around 33 days, rising to roughly 70 days when isolating exposure specifically linked to flows from the Strait. 

From a percentage standpoint, and among the top four buyers of crude in the region, Japan and South Korea are the most exposed to Hormuz, as they have historically sourced 81% and 62% respectively of their oil from the Strait.

In terms of days cover, India and South Korea are the most vulnerable, with 74- and 73-days’ worth of Hormuz days cover respectively.

When we move down the list of buyers exposed to Hormuz flows several Southeast Asian buyers, including the Philippines, Myanmar and Vietnam, have much thinner cushions and are already rolling out measures to manage the strain, as are most Asian economies. Singapore is the most exposed to Hormuz from a barrel perspective, relying on 680kb/d of oil from the region. While Brunei has sizeable days cover for crude, it has limited days cover for products.

In terms of barrels held in inventory, the levels are extremely different across the region, with Taiwan holding sizeable crude reserves but virtually no product inventory. What, however, is common to all these nations is that days of cover is very tight for almost all countries.

For the rest of Asia, outside of the big four, on average the countries source seventy percent of their imports from the Strait of Hormuz and their days cover is much weaker than the four majors. 

Governments worldwide are likewise exploring or enacting steps to stabilize domestic fuel markets.

Fast depletion and fast adaptation: country exposures and provisions enacted so far

Some of these responses are primarily precautionary, such as limiting exports or drawing down strategic stocks. 

Others are more forceful - signaling tighter physical availability - through demand‑curbing policies, targeted subsidies or, in some cases, rationing.

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