Record Oil-in-Transit Volumes Slow Brent Price Rally

The Brent front-month price has rallied by around $10/bbl over the past 10 days due to renewed military strikes between Iran and the US, but this rally is losing momentum. The physical market is at play here, with record volumes of crude already on the water providing a sizeable inventory cushion for refiners.

This means that despite geopolitical tensions, the urgency to chase replacement barrels has decreased. Oil-on-water inventories have reached a record high of 1.35 bn bbls, even higher than previous highs in late 2025.

Russian seaborne oil exports hit an all-time high of 4.37 mbd in June, while Gulf exports have fallen to 4.5 mbd over the past 10 days. If these lower export rates persist, the current inventory cushion will gradually erode, forcing refiners to compete more aggressively for replacement barrels.

Medium sour crude differentials and Dubai time spreads should strengthen further if this happens. However, until then, elevated seaborne inventories are likely to limit additional upside in outright crude prices despite ongoing geopolitical tensions.