Gulf oil exports rebound, but tanker attacks keep Brent near $100

What’s going on here?

Oil is flowing out of the Gulf again despite continuing attacks on ships. According to tanker-tracking firm Kpler, the seven-day average of Middle East crude exports reached about 18.3 million barrels per day on September 30, roughly matching the average in the year before the war with Iran began on February 28. At the same time, almost 20 commercial vessels, mostly tankers, were attacked around Hormuz, the Persian Gulf or off Oman over the past month, according to a security center run by US-allied navies. Brent crude, the international benchmark, fell 0.75% to $99.57 on Tuesday.

What does this mean?

The recovery relies on workarounds rather than a return to normal. Kpler estimates around 40% of the region's exports now avoid the strait entirely, largely through Saudi Arabia's East-West pipeline to the Red Sea port of Yanbu. Much of the rest crosses Hormuz on smaller shuttle tankers that hand their cargo to larger ships waiting outside, a system protected by a large US naval presence along the coast of Oman. Volumes through the strait itself remain below pre-war levels, at roughly 9 to 10 million barrels a day by various estimates, compared with about 13.5 to 14.5 million before the conflict.

Those workarounds are expensive. Daily earnings for a supertanker on the benchmark Saudi Arabia-to-China route have reached about $1.29 million, compared with under $30,000 a day on average from 2021 to 2025, according to the Baltic Exchange. Countries without their own fleets, such as Iraq, are scrambling to charter or buy tankers. Insurance and security costs have risen too, and at least nine sailors have died since July. Those costs are a big reason prices remain high even as more barrels move.

The shortage also runs deeper than one strait. Saudi Aramco's chief executive said almost three billion barrels of supply have been lost since the war began, and rebuilding global inventories could take up to two years. G7 countries have agreed to release up to 100 million barrels from strategic reserves, which may ease prices temporarily but does not fix the underlying supply gap.

The effects reach well beyond the Gulf. Asian refiners that relied on Middle Eastern crude are buying from further away, which lengthens voyages and ties up even more tankers. Higher freight and insurance costs are passed on through fuel, plastics and transport prices, and they keep inflation stubborn in many importing countries. For central banks already raising or holding rates, energy prices near $100 make it harder to declare victory over inflation.

The bull case

For consumers and oil-importing economies, rising Gulf exports and reserve releases could keep pushing prices lower if the shipping routes stay open. A negotiated settlement that reopens Hormuz fully would remove much of the risk premium built into today's prices.

The bear case

The rebound depends on fragile arrangements that a single successful attack on a pipeline or a few tankers could disrupt. With inventories already thin, any new escalation could send prices sharply higher again, and Iran continues to insist it controls the strait.