A. SREENIVSA REDDY (ABU DHABI)
Combined crude exports from Gulf nations have returned to pre-conflict levels as producers and shipping companies adapt to continuing security risks in and around the Strait of Hormuz, according to Kpler, a global commodities data and analytics company.
The recovery indicates that restoring physical oil supplies is no longer dependent on a comprehensive political agreement or the formal reopening of the Strait.
Oil prices, meanwhile, surged to about $105 a barrel amid renewed regional tensions.
“Combined crude volumes exiting the Arabian Gulf, excluding Iran, plus volumes from Saudi Arabia’s west coast and the UAE’s east coast are around pre-conflict levels of 18.5 million barrels per day,” Kpler said in an analysis.
Kpler said crude flows had recovered through a combination of escorted movements, ship-to-ship transfers, night transits, alternative routes and other operating practices, rather than through a single diplomatic breakthrough.
The company has consequently shifted its base-case outlook from a reopening led by a political agreement to a slower and less consistent normalisation while the conflict continues.
“Kpler is shifting its Strait of Hormuz base case from a deal-led reopening towards slower, managed normalisation,” the analysis said.
The revised assessment does not mean that the Strait has fully reopened or that shipping conditions have returned to normal. Instead, it indicates that producers and shipping companies are finding ways to move more crude despite the continuing risks.
US Secretary of State Marco Rubio offered a broadly similar assessment of the recovery in oil flows on Wednesday, saying Iran had “lost complete control” of the Strait of Hormuz.
“The Strait of Hormuz is open. There’s almost as much oil flowing out now as there was before this conflict began,” Rubio told reporters during a visit to Athens.
Kpler said the restoration of physical supply without a political settlement came at a cost. Higher freight charges and security-related expenses were being reflected in the price paid by buyers for delivered crude.
“Higher freight and risk costs are being embedded into delivered crude economics, meaning buyers can regain access to Middle East barrels without regaining pre-conflict delivered costs,” Kpler said.
Under its managed-normalisation scenario, Kpler expects crude availability to continue improving, while delivered prices are likely to remain elevated until risks to shipping recede materially.
The company expects the recovery to be flatter and more prolonged, extending through 2027. Transit volumes are projected to increase but remain volatile, rather than returning rapidly to normal following a diplomatic agreement.
The recovery of combined exports also reflects the growing use of routes outside the Strait. These include shipments from Saudi Arabia’s west coast and the UAE’s east coast, which are included in Kpler’s estimate of 18.5 million barrels per day.
Iraq is also accelerating efforts to find another route for its crude exports. The Iraqi government has asked Syria to facilitate crude shipments in addition to existing fuel-oil flows, Yousef Qiblawy, Chief Executive Officer of the state-owned Syrian Petroleum Company, told Bloomberg News.
“I expect the export of Iraqi crude via Syria by trucks to start as soon as possible, as the deal between both governments is almost done,” Qiblawy said.
“Hopefully, by mid-October, the first chain of trucks carrying crude will arrive in Syria,” he added.