Brent Crude Holds Below $100 Amid Ongoing Supply Disruptions

Despite escalating tensions in the U.S.-Iran conflict and disruptions to Gulf exports through the Strait of Hormuz, Brent crude oil has remained below $100 a barrel. One reason for this is that significant volumes have continued to flow through the strait, with roughly 4-5 million barrels per day still passing through since the fighting erupted again on August 30.

Gulf producers have also found alternative routes and are expected to continue sending cargoes for ship-to-ship transfers outside of Hormuz. Saudi Aramco resumed loadings from its Ras Tanura port inside the Gulf in August, although exports from Yanbu in the Red Sea remain under pressure from a naval blockade by the Iran-aligned Yemeni Houthis.

Meanwhile, non-OPEC producers including the U.S., Canada, and Guyana are set to increase output by a combined 1.4 million barrels per day this year, partly filling the shortfall. Demand destruction in petrochemicals and transportation fuels remains significant, with China accounting for more than half of that due to rising transport electrification and coal-based chemicals.

Spot premiums have rebounded to April levels, indicating physical tightness in the market. Several banks have raised their Brent price forecasts, including Morgan Stanley which expects prices averaging $100 a barrel in the fourth quarter.