Don't mistake Middle East oil rebound for normality: Bousso
USO•Middle East oil exports averaged 17.3 million barrels per day in October, above pre-war levels, but tanker rates and insurance costs remain sharply elevated. Brent crude has climbed to around $110 a barrel as traders weigh the risk of renewed escalation.
1. Exports rebound amid risk
Middle East oil exports averaged 17.3 million barrels per day so far in October, up from 16.4 million in September and above the 16.9 million average in the two months before US-Israeli strikes on Iran began on February 28. Strait of Hormuz flows rose to 11.7 million barrels per day from 9.75 million in September, though they remain about 82% of pre-war levels.
2. Shipping remains costly
Ship convoys using the Omani coastline under US naval protection have helped increase traffic through the strait, despite a record 12 attacks reported in or around Hormuz last week. A tanker carrying 2 million barrels from the Middle East to China costs around $1.4 million a day to charter, more than 12 times pre-war levels, while insurance costs have risen to around 10% of cargo value from roughly 3%.
3. Prices signal concern
Saudi Arabia’s Red Sea exports averaged 3 million barrels per day in October after recovering from a pipeline disruption. Despite global tanker volumes rising to around 157 million barrels on a four-week average, Brent crude reached around $110 a barrel, and daily ICE Brent options trading exceeded 1 million lots on Tuesday. The article says market participants appear concerned that exports may not be sustained if fighting intensifies.
