Brent Crude Remains Below $100 Amid US-Iran Conflict

The global oil benchmark Brent crude has continued to rally this month but remains below $100 a barrel despite recent supply disruptions in the US-Iran conflict. Despite a significant reduction in exports from the Middle East, particularly through the Strait of Hormuz, industry estimates suggest that daily exports are still between 6 million and 8 million barrels.

According to Rystad Energy's Chief Economist Claudio Galimberti, flows have fallen to below 2 million bpd since fighting erupted again on August 30, but the daily moving average is around 4-5 million barrels. This puts Brent at a 'fair' price of $95, he said.

Industry estimates also suggest that Gulf producers are using alternative routes and means to mitigate some of the earlier shortfall. Saudi Aramco has resumed loadings from its Ras Tanura port inside the Gulf in August, while exports from the UAE hovered around 2.9 million bpd in August and July after hitting a record in June.

Additionally, non-OPEC producers including the US, Canada, and Guyana are set to increase output by a combined 1.4 million bpd this year, partly filling the shortfall. However, demand destruction remains significant in petrochemicals and transportation fuels at 3.5 million bpd.

Physical markets tell a different story with spot premiums rebounding to April levels, with Dubai and Oman at $19-$20 a barrel above Dubai quotes for cargoes loading in November. Analysts have raised their forecasts with Morgan Stanley expecting prices averaging $100 a barrel in the fourth quarter.