Middle Eastern oil exports are recovering, yet prices keep climbing. Tanker attacks, record freight costs and low inventories keep supply fragile, according to Oilprice.com.
Oil flows out of the Persian Gulf are rebounding, but prices have only moved higher. Flows out of the Strait of Hormuz have averaged 11.7 million barrels daily in October, Kpler estimated. That is up from 9.8 million barrels daily in September and close to the pre-war average of 14.5 million barrels daily in February, Reuters reported.
Tanker attacks cloud the recovery
However, Iran has intensified its strikes on tankers. At least 25 ships were hit in Hormuz in the first 20 days of October, according to data from the UK Maritime Trade Operations and Iran's Islamic Revolutionary Guard Corps statements. Outlets tracking the incidents note that many ships do not report attacks, so the number could be as high as 40-50 vessels.
Kpler also reported a sharp drop in tanker traffic through Hormuz this month. Reuters reported at least 18 tanker attacks over the last two weeks, based on Kpler data. The daily average flow of oil out of the Persian Gulf had shrunk to 8.5 million barrels, the firm said.
Freight costs and shadow fleet limits
Meanwhile, much of the crude oil leaving the Gulf moves through ship-to-ship transfers, which have pushed freight rates to record highs. President Trump was said to be considering lifting sanctions on some tankers that carry Russian oil, to ease the shortage of carriers.
That may not help much. Rahul Kapoor, global head of shipping analytics and research for S&P Global Energy, told Bloomberg: "Sanctions relief does not equal immediately usable mainstream tanker capacity."
Futures rise while physical prices fall
Prices are moving higher on the futures market. In the physical market, prices are down, Bloomberg reported, because of the rebound in Hormuz outflows and a slight dip in tanker rates.
Still, a senior commodity analyst at Marex said oil stocks are low and difficult to see rebuilding given current dynamics. Oilprice.com's Irina Slav wrote that prices will likely remain elevated until at least the end of the year.
Source: Oilprice.com
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