California faces uncertainty as final shipment of Persian Gulf oil reaches Long Beach

The last California-bound oil tanker to pass through the Strait of Hormuz since the war broke out in the port of Long Beach is unloading its most important cargo – two million barrels of crude oil to be converted into gasoline, jet fuel and diesel.

The New Corolla was shipped to Iraq on Feb. 24 – a few days before the US and Israeli forces attacked Iran, which plunged the region into chaos and caused a double blockade of commercial shipping.

In two weeks, the tanker flagged in Hong Kong will have emptied completely at the Marathon Petroleum terminal and set off for distant waters. After that, California must find a way to replace the 200,000 barrels of oil a day that will no longer come from the Persian Gulf.

California’s crude oil supply has been declining since the 1980s, due to aging fields and geology that make drilling more expensive. The state’s oil refining capacity is also falling, increasing reliance on imports and highlighting California’s status as a lone energy island with no gas pipelines to deliver supplies to other states.

Now, with an end to the Middle East conflict nowhere in sight and the average cost of California gasoline reaching $6 per gallon, some lawmakers are warning of potential oil and gas shortages.

So far during the Iran war, California’s oil supply has remained steady. The state imports about 75% of its oil from foreign countries and Alaska. Last year it bring the mixture from Brazil, Iraq, Guyana, Canada, Ecuador, Argentina and Saudi Arabia as its top international suppliers, about 30% from the Middle East.

In March and April, that mix didn’t change much, with California getting about 21% and 14% of its foreign oil from Iraq and Saudi Arabia, respectively, according to data analytics firm Kpler.

Shipments that left before Iran blocked the Strait of Hormuz in late February continued to arrive for two to two months, about the same time it takes a tanker to make the trip. But if the crisis remains closed in May, “all bets are off,” said Ryan Cummings, chief of staff at the Stanford Institute for Economic Policymaking.

“Refineries have to go somewhere else, and they’re scrambling to figure out where to get that oil,” said Susan Bell, senior vice president at consulting firm Rystad Energy. “They don’t have many options.”

It is too early to say how California refineries – the state’s biggest crude importers – plan to reverse the loss of Persian Gulf oil.

Refiners typically plan to receive their money in the next two months, Bell said. But Chevron could not share its supply plans, describing them as “critical to our business.” And other top state refiners did not respond to requests for comment.

Bell said refiners may be looking at imports or are already making plans to import more oil from countries that already have crude, such as Ecuador and Canada’s west coast, where freight costs are lower due to shorter travel distances.

“They’re definitely going to look to Brazil for medium grades,” Bell said, noting that crude oil is the heavy crude and medium grade preferred by many California refineries. “Guyana might be a little too bright to want to go up, but you know, a liquid barrel is a liquid barrel, so they won’t worry too much about quality.”

Cummings said that California refiners may be able to outpace other states competing for the same barrels for a while, but there is more to be done. “We’re looking at 800 million to a billion barrels of production loss,” Cummings said. “That’s incredibly strong.”

Already, China, Thailand, South Korea, Pakistan and other countries have reduced or blocked oil exports to protect domestic supplies in the face of oil shortages and rising costs that make production more expensive.

Some California lawmakers have been sounding the alarm about possible shortages of both oil and gas in the coming months. The California Energy Commission said it is “working closely with refiners” and “is aware that they are identifying and using alternative routes and sources of pollution.”

Spokeswoman Nikki Woodard said the agency is confident about the state of the state’s oil supply, including refinery and storage stocks, over the next six weeks.

“We went into this with a good healthy inventory, but those are still being sorted out, so that’s where it gets really critical,” Cummings said.

Data about shipments already underway can provide a preview of what’s on the way. Besides the New Corolla, one tank that left Iraq a month before the war began has been stationed in Long Beach since March, but nothing else has arrived in the region. Saudi Arabia has been able to get around the Strait of Hormuz with supplies from the Red Sea, but none of those barrels are headed for the West Coast.

Matt Smith, an analyst at Kpler, said that Argentina, Ecuador and Brazil already have negatives on the way, but it is too early to see any increase in volumes to match those lost.

Unlike fuel from Asia or the Middle East, cargoes from Canada or Latin America “can be loaded now and come out next week,” Smith said.

California has also been importing gasoline at steeper rates since the Valero Benecia refinery shut down in February and the Phillips 66 Wilmington refinery went online in December. The PBF Martinez refinery, which caught fire in February 2025, is not back online. While in 2024 California imported about 10% of its gasoline, it now imports 20%.

California’s top oil suppliers are South Korea, the Bahamas and India. Like oil, shipments continued to arrive in April, but that will change.

South Korea has virtually suspended jet fuel exports and reduced gasoline and diesel exports. India has increased the export duty on finished petroleum products and is also exporting less. “We see very little in the waters towards the West Coast,” said Smith.

The Bahamas, where fuel from the US Gulf Coast is being re-routed, may begin to slow down, but by how much remains to be seen. “There is a big question about where the fuel will go from next,” said Smith.

The Energy Commission said the state is predicting the delivery of liquid fuel in May. “We expect to see an increase in imports in June as the market adjusts to the new supply reality due to the conflict in Iran,” Woodward said.

Jamie Lewis, an oil analyst with Wood Mackenzie, a global research and communications firm, said he would “expect to see prices go up significantly before we see any shortages in California.”

Kate Gordon, who heads the economic policy nonprofit California Forward and was a former climate adviser to the Biden and Newsom administrations, said the only way for California to reduce its exposure to global oil price volatility is through strategies like investing in electric vehicles and infrastructure.

“Even in Texas, where they obviously have a lot of drilling and a lot of material available, prices are going up because the dealers are selling to whoever pays the most during the ban, and everyone is facing restrictions everywhere,” Gordon said. “The only way to reduce dependence on this global system is to reduce the demand for oil.”