Oil Prices Soar Amid Ongoing Middle East Conflict
Oil prices have surged to their highest level since May, with benchmark crude oil trading at $105/bbl, up $21/bbl from August and 45% above pre-war levels. The price of diesel/gasoil has surpassed the $200/bbl mark in early September, a 94% increase over pre-war levels. Refined product prices have tightened significantly, pushing refinery margins to record levels in the Atlantic Basin.
Total oil exports from Gulf countries in August are estimated at around 13 mb/d, nearly half their pre-war level. Crude losses have narrowed to just below 45%, supported by increased flows bypassing the Strait and US military escorts protecting flows through Hormuz. However, refined product and LPG exports remain nearly 60% less than in February.
The IEA has further cut its supply and demand projections for the remainder of the year due to the ongoing conflict in the Middle East and Russia-Ukraine war. World oil supply is now projected to average 100.7 mb/d in 2026, down 5.7 mb/d from last year. Global oil demand is forecast to fall by 2.5 mb/d in 2026.