US-Iran Conflict Fails to Breach $100 Oil Price Ceiling

Global oil benchmark Brent crude has continued to rally despite recent escalation in the US-Iran conflict, but remains below $100 a barrel. The conflict has disrupted Gulf exports from the Strait of Hormuz and the Red Sea, with Argus reporting that crude oil shipments from Middle East producers have fallen to around 11 million barrels per day (bpd), down from 18m bpd before the US-Israeli war on Iran began seven months ago.

Despite these disruptions, significant volumes have been able to flow through Hormuz, with industry estimates putting daily exports between 6m and 8m barrels. Rystad Energy's Chief Economist Claudio Galimberti noted that while flows have fallen to below 2m bpd, the daily moving average is still around 4m to 5m barrels, which puts Brent at a 'fair' price of $95.

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. Non-Opec producers, including the US, Canada, and Guyana, are set to increase output by a combined 1.4m bpd this year, partly filling the shortfall.