Risk Premium Drives Oil Prices Amid Middle East Export Recovery
Oil futures remain high despite Middle East exports recovering to pre-attack levels. According to Goldman Sachs analyst Yulia Zhestkova Grigsby, Persian Gulf oil exports have returned to last year's average of 23.3 million barrels a day, with Saudi exports more than doubling in September to 11.6 million barrels a day.
This rebound came despite an attack on the Saudi East-West pipeline and the Houthi blockade of Saudi exports through the Bab al-Mandab strait. The UAE also exported above its 2025 average, while Iran's seaborne crude and refined product exports were reportedly zero during the month.
The global oil market was roughly balanced in September, estimates Goldman, with Brent expected to moderate to $85 a barrel by year-end and $80 in 2027. However, physical prices such as dated Brent remain near $120 a barrel due to a 'large risk premium' driven by concerns over supply disruptions and low global stocks.
Goldman points out that this premium reflects the desire to rebuild stocks quickly given escalation risks, with downside risks to supply from conflicts threatening long-term oil production. In other words, investors are willing to pay a higher price for oil due to uncertainty surrounding its availability in the future.