Shippers and regional producers have turned to expensive detours, including overland pipelines across Saudi Arabia and the United Arab Emirates, to avoid volatile maritime choke points. In addition to these rerouting measures, elevated risk premiums have pushed freight charges to roughly ten times their normal rates. The persistent rally is further compounded by October being the deadliest month for regional commercial shipping, which recorded 32 incidents. Meanwhile, underlying output remains restrained, with September production among Gulf OPEC members still lagging a quarter below pre-war levels.
Key points
Escalating freight costs reaching up to $40 per barrel are keeping oil prices inflated de…: Escalating freight costs reaching up to $40 per barrel are keeping oil prices inflated despite the recovery in regional export volumes.
Ongoing hostilities and dangerous shipping conditions have forced reliance on costly shut…: Ongoing hostilities and dangerous shipping conditions have forced reliance on costly shuttle transfers and overland infrastructure.
Sustained supply risks persist as September Gulf OPEC production remained 25 percent belo…: Sustained supply risks persist as September Gulf OPEC production remained 25 percent below its pre-war baseline.
Sources checked by our analysis pipeline: 1
Brent crude prices are up more than 60 percent compared with pre-war levels, despite rebound in supply.
Oil flows out of the Gulf have increased substantially, easing the huge supply disruption caused by the United States/Israel war on Iran.
Crude exports from the Gulf averaged 24.6 million barrels per day (bpd) in the week to October 18, exceeding the pre-war average, according to market intelligence firm Kpler.
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Yet, oil prices continue to rise.
Brent crude, the global benchmark, is trading at its highest prices since April, up more than 60 percent compared with before the war.
On Friday, Brent crude front-month futures – contracts for oil deliveries in December – rose more than 2 percent to…
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