Global oil benchmark Brent crude has risen sharply this month but remains below $100 a barrel despite renewed US-Iran hostilities disrupting oil exports through the Strait of Hormuz and the Red Sea.
Crude shipments from Middle Eastern producers have fallen to around 11 million barrels per day (bpd), down from about 18m bpd before the war began seven months ago, according to Argus. However, several factors have helped limit the impact on global oil prices.
In the week before fighting resumed on August 30, around 8m to 9m bpd was moving through the Strait of Hormuz, about twice the volume recorded the previous week, according to Rystad Energy chief economist Claudio Galimberti.
Although flows have since dropped below 2m bpd, the daily moving average remains around 4m to 5m barrels. Galimberti said this level was consistent with a “fair” Brent price of about $95 a barrel.
Industry estimates put daily exports through the strait at between 6m and 8m barrels. Kpler data showed no very large crude carrier had visibly exited the waterway since September 2.
During a temporary US-Iran peace deal in July, oil flows through Hormuz recovered to pre-war levels of around 16m bpd.
Gulf oil producers have increasingly relied on alternative export routes and are expected to continue using ship-to-ship transfers outside the Strait of Hormuz, helping offset some of the supply losses.
Saudi Aramco resumed loadings from its Ras Tanura port inside the Gulf in August. Meanwhile, exports from Yanbu on the Red Sea remained under pressure because of the Houthi naval blockade.
Kpler data showed Saudi exports from Yanbu fell to a six-month low of 1.43m bpd in August, compared with an average of 3.9m bpd during the previous three months.
Exports from Egypt’s Sidi Kerir, an alternative route, rose to 2.14m bpd in August, more than double June levels.
Iraq’s crude exports also recovered to around 2.34m bpd in August, while exports from the United Arab Emirates remained around 2.9m bpd. Kuwaiti crude shipments recovered to roughly 1m bpd in July and August.
Iranian oil exports, however, have fallen sharply amid the US blockade.
Non-Opec producers, including the United States, Canada and Guyana, are expected to increase combined output by around 1.4m bpd this year, according to Rystad Energy founder Jarand Rystad.
Russian crude exports remained around 5.5m bpd in July and August, below the 6.4m bpd recorded in June but still 23 per cent higher than in February. Kpler attributed the increase partly to reduced refinery processing following damage to Russian facilities from Ukrainian attacks.
Russia has nevertheless lowered its 2026 oil production forecast to a 17-year low, a development that could weigh on future exports.
A decline in global oil demand has also helped prevent a sharper rise in prices.
Rystad estimates demand destruction in petrochemicals and transport fuels at around 3.5m bpd in the third quarter, down from 4.5m bpd in the second quarter. China accounts for more than half of the reduction, driven partly by increased transport electrification and lower demand for oil-based chemicals.
China, the world’s largest crude importer, reduced seaborne oil shipments to around 7m bpd in July and August, from more than 11m bpd in February.
The country’s large crude reserves have also provided some reassurance to markets. Kpler estimates China’s oil stockpiles at around 1.17 billion barrels.
Despite the relatively contained rise in headline crude prices, physical oil markets indicate that supplies remain tight.
Spot premiums have returned to levels last seen in April, with Dubai and Oman crude trading at significant premiums for November-loading cargoes. Oman futures were at $104.54 a barrel on Monday, while cash Dubai stood at $105.10.
Argus chief economist David Fyfe said physical markets were showing signs of severe tightness, particularly in diesel supplies.
The latest US-Iran escalation is expected to further restrict Gulf exports even as refiners increase production of diesel, pushing fuel prices higher.
Several major banks have increased their oil price forecasts as they expect shipping disruptions in the Middle East to persist.
Morgan Stanley now expects Brent crude to average around $100 a barrel in the fourth quarter.
Goldman Sachs has raised its Brent and West Texas Intermediate forecasts by $5 a barrel for December 2026 and 2027, citing expectations that Middle East shipping disruptions could continue into next year.
The bank now forecasts Brent at $85 a barrel and WTI at $80 for December 2026, while its 2027 forecasts stand at $80 and $75, respectively.
Despite the severe disruption to Middle Eastern oil flows, continued shipments through Hormuz, alternative export routes, higher output from other producers and weaker demand have so far prevented Brent from breaking above the $100 threshold.
