Oil's new problem isn't supply. It's logistics: Bousso
USO•Middle East crude flows through the Strait of Hormuz reached 14.2 million barrels per day on a seven-day average in September, nearly 80% of pre-war levels, but Brent remained above $100 as shipping, insurance and refining bottlenecks kept costs high.
1. Crude flows recover
Middle East crude exports have climbed as Gulf producers resume transit through the Strait of Hormuz, despite the threat of attacks. Kpler put flows at 14.2 million barrels per day on a seven-day average on September 26, nearly 80% of pre-war levels. The global oil deficit has narrowed to about 1.6 million barrels per day from roughly 4 million at the peak disruption in May, Energy Aspects estimates.
2. Freight costs surge
Brent remains above $100 a barrel, more than 40% above pre-war levels, as freight and insurance costs add to the geopolitical risk premium. Middle East-to-Asia VLCC rates recently exceeded $1.2 million per day, up from roughly $30,000 in January, while freight has risen from around 3% to roughly 27% of the delivered price of a barrel. Tanker shuttles around the Gulf and longer Atlantic-to-Asia routes are tying up vessels.
3. Refining constraints
Lost refining capacity in the Middle East and Russia has added to supply-chain pressure, particularly for diesel, whose prices have surged to record highs. Refiners are competing for medium-sour crude grades that yield more diesel, supporting crude prices as tight refining capacity boosts diesel prices and demand for those grades. The article says transport and processing constraints may take months or years to unwind.
