Oil Prices Stagnate Below $100 Despite Middle East Tensions

Despite escalating tensions in the Middle East and disruptions to oil exports from the Strait of Hormuz, global oil benchmark Brent crude has failed to reach $100 a barrel. According to Argus, crude oil shipments from Middle East producers have declined to about 11 million barrels per day (bpd) from 18 million bpd before the Iran war began seven months ago.

Rystad Energy's Chief Economist Claudio Galimberti points out that significant volumes have been able to flow through Hormuz, with a daily moving average of around 4-5 million barrels. This has kept Brent at a 'fair' price of $95, he said.

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