Gulf Oil Flows Recover, Yet Brent Stays Near $110 a Barrel

what happened

Crude shipments from the Persian Gulf have recovered sharply, at times matching and even topping pre-war volumes, the Wall Street Journal reports. Still, Brent has climbed again to roughly $110 a barrel, a level it last reached in late April, when exports ran at about half their current pace.

Traders and analysts point to worries about renewed fighting, shrinking oil stocks and a patchwork shipping system that remains risky and expensive to run. JPMorgan commodities strategy head Natasha Kaneva said pinning down the right oil price has become unusually hard. Her model puts Brent's fair value at $94, well below current quotes. Goldman Sachs estimates that supply fears have added around $27 a barrel to the benchmark, while US gasoline has averaged $4.25 a gallon according to AAA.

Investors fear Washington could resume strikes on Iran after next week's midterm elections. Attacks on vessels near the Strait of Hormuz hit a record count this month, and Iran's Persian Gulf Strait Authority threatened legal action against Sinokor ships from November 1. Kpler data show Gulf exports dropped to at least 15.7 million barrels a day in the week through October 26, after topping 24 million in the week through October 18.

why it matters

The gap between flows and prices points to a thin cushion. According to the IEA, on-land oil inventories that can be drawn quickly are near their lowest since at least 2016. The IEA also put freight costs from the Gulf to Asia at about $36 a barrel in early October, and some analysts think those costs are feeding into Brent. China, the world's largest oil importer, is also rebuilding purchases, a shift that can move the global market.

market impact

Brent and gasoline: supply risk and thin stocks keep pressure on crude prices

• ▲Brent pressure up — fears of renewed escalation and low stocks support the price

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