Persian Gulf Oil Exports Recover to Two-Thirds of Pre-War Levels

Persian Gulf oil exports have recovered to about two-thirds of pre-war levels, with 15 million to 16 million barrels a day leaving the Middle East, Goldman Sachs said, limiting the Iran war's impact on crude prices.

"The rise in dark crossings by specialized shippers and in ship-to-ship transfers shows that producers and shippers are adapting to the Mideast conflict," Goldman Sachs analysts said in a note carried by Bloomberg.

Total Middle Eastern volumes remain about 7 million to 8 million barrels a day below February levels but have risen materially in recent weeks, the investment bank said. Flows through the Strait of Hormuz alone are likely close to the U.S. estimate of 8 million to 10 million barrels a day. Brent crude settled up 2.1 percent Thursday, snapping a three-session losing streak, after a Wall Street Journal report said President Donald Trump was not interested in returning to the terms of a June memorandum of understanding with Iran.

The recovery in flows, combined with the U.S. military's confirmation that it cleared Iranian mines from the Strait of Hormuz, could keep a lid on crude prices even if the conflict drags on. Goldman Sachs continues to see greater price upside to European natural gas and longer-dated oil product contracts than to crude in scenarios involving persistent disruptions.

The estimates, derived using two independent methods, mark a sharp improvement from the March trough, when Middle Eastern volumes fell to roughly 10 million barrels a day. Anonymous traders told Bloomberg that Qatar and Kuwait have managed to boost their crude exports through the Strait of Hormuz to 70 percent of pre-war levels, following the United Arab Emirates in shuttling oil through the chokepoint and using ship-to-ship transfers in the Gulf of Oman.

Total flows through the Strait of Hormuz have risen to about 7 million to 8 million barrels a day, up from roughly 4 million barrels a day in the middle of July, according to Bloomberg's trading sources. The strait handled about one-fifth of global daily seaborne oil and liquefied natural gas supplies before the U.S.-Israeli war on Iran began Feb. 28.

The mine-clearing effort adds to the supply picture. The top U.S. commander for the Middle East said American forces have cleared Iranian mines from the Strait of Hormuz, after Washington's allies expressed doubts about similar claims by Trump. The confirmation reduces the geopolitical risk premium embedded in crude prices, which had priced in sustained disruption to the chokepoint.

On the demand side, the recovery in supply comes as global refiners contend with elevated product prices. Goldman Sachs sees greater upside to longer-dated oil product contracts than to crude, reflecting tightness in refined fuels even as raw crude flows normalize. That divergence could persist if the conflict keeps disrupting shipping routes in the Red Sea, forcing tankers onto longer diversions around the Cape of Good Hope.

The war's trajectory remains uncertain. Washington and Tehran signed a memorandum of understanding in June providing for an immediate cessation of hostilities, but the United States resumed large-scale strikes on Iran on July 8, accusing Tehran of violating the terms regarding the Strait of Hormuz. The last time flows through the strait fell to such depressed levels, in March, Brent spiked as traders priced in a prolonged closure; the subsequent recovery has unwound much of that premium.

For traders, the key question is whether the recovery is durable. If shuttle services and dark activity keep volumes near current levels, crude prices could stay rangebound even as the conflict persists. If the standoff escalates again, the 7 million to 8 million barrels a day still missing from February levels leaves little buffer for further disruption.

This article is for informational purposes only and does not constitute investment advice.