Report
Oil prices stay high as Iran war disrupts Persian Gulf supply
Brent crude is more than 60 percent above pre-war levels even after oil flows from the Persian Gulf rebounded, with exports averaging 24.6 million barrels per day in the week to October 18, according to Kpler. Analysts cited by Al Jazeera said prices are being driven by fears of renewed hostilities involving Iran, depleted global inventories and freight costs that have reached as much as $40 a barrel. The UKMTO logged 32 incidents against commercial vessels in October, the deadliest month for such attacks since the war began.
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The rebound has come through costly workarounds. Shipping lines set up a shuttle system using ship-to-ship transfers off Oman and the United Arab Emirates, and Kpler data showed more than 70 percent of crude crossing the Strait of Hormuz in August did so via such transfers. As of September, 40 percent of Persian Gulf exports bypassed the strait through Saudi Arabia’s East-West pipeline and the UAE’s Habshan-Fujairah pipeline, compared with 17 percent before the war, according to Kpler.
Longer-term supply remains uncertain. Pavel Molchanov of Raymond James & Associates told Al Jazeera that the IEA’s latest monthly data showed OPEC production in the Persian Gulf at 15.8 million bpd, or 75 percent of the pre-war baseline. The IEA also reported that observed global inventories fell by 10 million barrels in that month and stood 509 million barrels below pre-war levels, while Brent futures for delivery in late 2027 were still above $90 a barrel on Friday.
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