Battle for Mideast oil market share has already begun: Bousso
USO•Middle East crude exports exceeded pre-war levels for much of the week ending October 3 as Hormuz traffic recovered, and the global supply deficit is expected to narrow to 250,000 barrels per day in October from nearly 4 million in May. Gulf producers are increasing output to regain customers, while Brent remains above $100 a barrel.
1. Exports rebound
Crude exports through the Strait of Hormuz averaged 12 million barrels per day over the past two weeks, about 80% of pre-war levels. Including alternative routes, Middle East crude exports exceeded the pre-war average of 18 million barrels per day for much of the week ending October 3, Kpler data showed. Energy Aspects expects the global crude supply deficit to narrow to 250,000 barrels per day in October from almost 4 million in May.
2. Gulf output recovers
Combined crude production in Saudi Arabia, the UAE, Iraq and Kuwait is expected to average 17.3 million barrels per day in October, compared with about 21 million in the six months before the war. Saudi crude exports averaged about 7.3 million barrels per day over the past three weeks, close to pre-war levels, while Saudi production is expected to average 7.4 million barrels per day in October. UAE crude exports have averaged 3.3 million barrels per day since June, broadly matching pre-war levels.
3. Market risks remain
Iranian forces continue to target vessels in the Strait of Hormuz, with nearly one tanker hit daily over the past two weeks, and high shipping and insurance costs have kept Brent above $100 a barrel, around 40% above pre-war levels. Iran's share of Asian crude imports fell from 6% in March to zero in October, while Saudi Arabia's share is expected to recover to around 14% this month from 9% in September. The columnist writes that pump prices are unlikely to fall substantially while passage through Hormuz remains risky and expensive.
