Oil exports from Gulf rebound but Brent prices keep climbing

Crude exports from the Gulf rose to an average of 24.6 million barrels per day in the week to 18 October, according to market-intelligence firm Kpler, surpassing the pre-war average. Despite the increase in supply, Brent crude futures for December delivery climbed more than 2 percent on Friday, briefly topping $117 a barrel, the highest level since April.

Analysts attribute the price rise to lingering uncertainty over the United States/Israel conflict with Iran, shrinking global oil inventories and sharply higher transportation costs. > "The market is doing exactly what it is supposed to do: it is telling us there is plenty of prompt oil, but there is no end to this war in sight – in fact … escalation is very likely," said Adi Imsirovic, a lecturer in energy systems at the University of Oxford and former oil trader.

To mitigate the threat of Iranian attacks in the Strait of Hormuz, shipping companies have adopted ship-to-ship transfers off Oman and the United Arab Emirates and increased use of pipelines that bypass the strait, such as Saudi Arabia’s East-West pipeline and the UAE’s Habshan-Fujairah line. Kpler data show that in August more than 70 % of crude crossing the strait did so via these transfers, and by September 40 % of Gulf exports were routed around the strait, up from 17 % before the conflict.

These workarounds have raised freight costs to about $40 per barrel, roughly ten times the usual rate, driven by higher insurance premiums and logistical challenges, according to the London Stock Exchange Group. Isabel Figuerola-Ferretti, an oil-market expert at Comillas Pontifical University, warned that while barrels are moving, the process remains neither smooth nor reliable.

Production data from the International Energy Agency indicate Gulf output reached 15.8 million barrels per day in September, about 75 % of the pre-war baseline. Pavel Molchanov, an investment strategist at Raymond James & Associates, noted that this remains well short of the pre-conflict level. Global oil inventories fell by 10 million barrels in September, leaving stockpiles 509 million barrels below pre-war levels.

With no permanent resolution to the Iran war in sight, analysts expect Brent prices to stay elevated. Futures for October 2027 delivery were above $90 a barrel on Friday. Figuerola-Ferretti said a return to $70 a barrel would require a durable de-escalation, normal transit through Hormuz, rebuilt inventories and lower freight costs. Molchanov added that supply is unlikely to exceed 85 % of pre-war levels without a diplomatic settlement and subsequent logistical steps such as de-mining Hormuz and restoring production at shut-in fields.