Despite a resumption in hostilities between the U.S. and Iran, and the resulting re-closure of the Strait of Hormuz, Tehran and its major Gulf oil-producing rivals are in a race to boost their respective oil exports and restore or carve out their share of critical markets.
This can be seen in Iran’s bid to export between 69 million includes Iranian oil loaded for delivery beyond the confines of the Gulf and 122 million barrels of crude oil since June 19, even as Washington maintained most of its sanctions against Tehran. Oil laden on Iran’s “shadow fleet” constitutes an additional 53 million barrels. Prior to the war, Iran exported nearly 2.2 million barrels of crude per day, compared to more than 80 million barrels of crude exported since the U.S.-Iran ceasefire deal. Despite the renewed risk of extended U.S. and Iranian blockades on oil exports through the Strait, Gulf oil-producing giants continue to step up crude supplies; by the time of writing, Saudi Arabia had exported over 30 million barrels of crude through the waterway since mid-June; the United Arab Emirates, too, has restored the bulk of its lost output at an impressive pace.
But what will determine the Gulf’s profitability relative to Iran as competition in oil exports intensifies? The answer will lie with the Association of Southeast Asian Nations (ASEAN)—a 10-member economic bloc with unique advantages in terms of crude procurement from the Middle East.
First, ASEAN’s collective multitrillion-dollar economy continues to serve as a major consumer of Middle Eastern oil during the war. This remains the case despite crude storage facilities across the bloc reaching capacity in recent weeks. Since March, ASEAN-based refiners have been quick to ramp up intake of U.S., Russian, African and Latin American crude to make up for protracted supply disruptions in the Strait. With ASEAN’s crude imports from the GCC remaining broadly stable, major importers in the bloc have limited room to absorb additional Iranian supplies without displacing existing suppliers, underscoring the challenge Iran faces in concentrating its oil exports within ASEAN.
China, Tehran’s top oil purchaser, has drastically scaled back its imports of Iranian crude, while ASEAN reveals new space to accommodate future crude supplies to meet its rising energy demand.
These factors compel Iran to treat ASEAN as a priority market for future oil exports, given its push to target markets with high energy import demand. Early signs of Iranian resolve are clear: it is keen to scale its oil export volume beyond 80 million barrels since the U.S.-Iran Memorandum of Understanding was signed on June 17. Tehran also managed to send millions of crude barrels to markets in the space of just 24 hours this month, despite U.S. airstrikes on sensitive installations. However, Tehran’s supplies have partly been driven by stranded tankers as opposed to fresh oil production, dealing a unique advantage to its Gulf rivals.
Key beneficiaries of this competition for ASEAN market share are Saudi Arabia and the UAE. Both oil giants have ramped up exports, and appear cognizant of long-term demand in Southeast Asia. Some ASEAN economies are also helping the bloc’s refiners procure more oil and diversify their traditional supplier options. What works to the GCC’s advantage is its push to increase oil production despite the constraints of war, a critical pillar for building ASEAN’s confidence in its credibility as a supplier.
Not only does Iran lack the ability to deliver oil to Southeast Asia without the Gulf waterway open, but it is also struggling to rival the GCC states’ status as a trusted source of crisis-time oil supplies. Tehran lacks a multi-year energy cooperation framework with ASEAN states that enables it to extend crude supplies at scale. ASEAN’s growing preference for Russian crude further limits Iran’s prospects of winning over excess oil demand within the bloc, an objective Tehran appears keen to avoid since April. A favorable view of Gulf-linked crude during last year’s Israel-U.S. airstrikes on Iran demonstrated the Gulf’s dependability as a supplier during periods of acute disruption.. Despite the Strait of Hormuz’s frequent closures, GCC states have still been able to get crude to market and aid critical oil processing operations in Southeast Asia.
Long-Standing Partnerships
Tehran’s crude exports are also mostly comprised of grades that major refineries within ASEAN can alternatively procure from third-party markets. Ramped-up imports from the U.S. in recent weeks bring that constraint home. However, Iran struggles to supply a wider range of crude grades to ASEAN and currently depends more on stranded oil in Southeast Asian waters to drive up exports. In contrast, GCC states are actively supplying a wider bracket of medium and heavy crude to Asian refineries, including in Southeast Asia. Their added success in accelerating production in recent weeks is also estimated to unlock new profits through high-demand markets in the long run, including ASEAN.
The 10-member bloc also adopts a diversified oil procurement approach that markets, including in the European Union, have struggled to maintain effectively since the onset of the U.S.-Iran war. Evidence shows that European countries have suffered disproportionate exposure to Middle Eastern oil disruptions since the U.S.-Israeli attacks against Iran began in late February. The resulting uptick in prices has further saturated the EU’s space for consistent energy imports, a priority that drew Italy’s Prime Minister Giorgia Meloni to Qatar in April to hammer out a stronger, more risk-averse energy partnership. But with U.S.-Iran tensions showing few signs of abating, and major Gulf oil producers ramping up fresh output, ASEAN’s openness to procuring excess supplies makes it a vital lever to help maximize Gulf oil export gains in the long run.
Some ASEAN states also have the advantage of being able to source Gulf crude volumes despite the crisis, including through increased shipments from Saudi Arabia’s Red Sea Yanbu port and the UAE’s Fujairah port. The latter sits outside the Strait and continues to operate at capacity. ASEAN also shares a multiyear energy cooperation framework with the Gulf, which has led to ASEAN taking record imports in recent years. These are advantages that Tehran currently lacks in optimizing its oil export gains. The Gulf’s added recognition as a priority partner in ASEAN’s oil sourcing also strengthens prospects of matching current crude export volumes with complementary demand in Southeast Asia, partly offsetting demand shortfalls in Europe and China. Together, these considerations could contribute to a near-term profit spike that tilts the wartime crude export competition between Iran and the Gulf to the latter’s advantage.
Finally, and paradoxically, Southeast Asia’s mega push toward clean energy demands that it procure Gulf crude to offset the risks of an energy shock. The Strait of Hormuz’s closure in March dealt the sharpest such shock to the bloc in a decade, underlining the utility of crude to power local industries that are critical to advancing ASEAN’s multiyear green energy transition. The bloc is leading a push to procure less climate-friendly energy supplies under the ASEAN Plan of Action for Energy Cooperation (APAEC) 2026-2030. As a result, ASEAN states have ample incentive to expand crude procurement partnerships with time-tested Gulf allies, effectively adding to their competitive edge.
As such, ASEAN’s rising demand for an oil-backed energy transition, limited preference for Iranian crude, and longstanding energy partnerships with the GCC all make clear that the Gulf states’ path to optimizing oil export gains runs through Southeast Asia. By contrast, Iran’s limited familiarity with the ASEAN energy economy and weaker track record on direct oil supplies dampen its prospects of winning market share from its Gulf rivals.
