Oil stays above $100 even as Gulf exports rebound

Oil exports from the Persian Gulf have recovered to roughly their prewar volumes, and at times have gone above them. Brent crude is still trading around $110 a barrel, a price last seen in late April, when exports were about half of today's level, The Wall Street Journal reported. Traders and analysts point to three reasons. They fear the conflict could escalate again, oil stockpiles are running low, and the makeshift shipping network is still dangerous and expensive. Eight months into the war with Iran, the market is paying for the threat of a shortage more than for any actual shortage.wsj.com

The $27 fear premium

Goldman Sachs estimates that fear of further disruptions adds about $27 a barrel to Brent. On the bank's Exchanges podcast, co-head of commodities research Daan Struyven put Brent's fair value at $85. He said nearly all of the recent price rise comes from the risk premium, not from changes in supply and demand. Refiners are buying oil while it is available, and investors are buying futures as a hedge against an energy shock, the Journal reported. JPMorgan's Natasha Kaneva estimates fair value at $94.goldmansachs.com+1

A big part of the worry is political. Investors fear the U.S. could resume strikes on Iran after the midterm elections on November 3, and the U.S. has reportedly told Gulf Arab states to prepare for a short, intense military campaign. Struyven said that if escalation does not follow the vote, it is "reasonable to assume that the risk premium does moderate somewhat." Brent fell in early trading on Thursday, October 29, on renewed hopes for U.S.-Iran talks, Invezz reported.invezz.com

A fragile recovery

Ship tracker Kpler said Gulf exports topped 24 million barrels a day in the week through October 18, above the prewar level of 23.3 million. They then fell to at least 15.7 million in the week through October 26, as shipping attacks near the Strait of Hormuz hit a record, the Journal reported. On October 27, a new Iranian strait authority warned of legal action against vessels owned by Sinokor starting November 1. Sinokor's ships made up more than a fifth of identified tanker traffic through the strait over the past three months.wsj.com

Fuel products have recovered much less than crude. Goldman puts Gulf crude exports at 110% of their 2025 average, but refined fuels such as diesel at only 40%. Average global crude freight rates are above $20 a barrel, up from $3 a year ago, Asharq Al-Awsat reported, citing Goldman.english.aawsat.com

Thin buffers

According to the International Energy Agency, oil stocks on land that could be quickly drawn down are near their lowest since at least 2016. The U.S. Strategic Petroleum Reserve holds 282.7 million barrels, its lowest level since 1982, Oilprice.com noted. That piece cited Standard Chartered, which expects refilling government reserves to absorb many of the returning barrels. China has also been importing more oil since June. "This recovery has coincided with a sharp deterioration in maritime security," UBS strategist Giovanni Staunovo said.finance.yahoo.com+1