Oil exports from the Middle East exceeded prewar levels in late September

Middle East oil exports exceeded prewar levels at points in September, according to ship-tracking data cited by Reuters. Persian Gulf producers increased shipments despite continued attacks on shipping in the Strait of Hormuz.

Oil prices are down today as of this writing. Futures for benchmark Brent crude fell 0.8% to around $101.50 per barrel, while U.S. West Texas Intermediate futures decreased 1.4% to trade at just under $90 per barrel.

The seven-day moving average for crude oil exports from the Persian Gulf stood at 18.3 million barrels per day as of September 30, according to provisional data from Kpler, which tracks global commodity flows. Shipments exceeded prewar levels on 14 days in September. The figure included Persian Gulf oil shipped through the Strait of Hormuz and the Red Sea, as well as crude loaded at terminals and transferred from ship to ship in the Gulf of Oman. In the 12 months before the start of the U.S.-Israeli war with Iran, crude exports from the region averaged around 18 million barrels per day, Kpler notes.

According to the firm’s estimates, shipments had previously matched or exceeded prewar levels on individual days in June and July, after Washington and Tehran reached a memorandum of understanding that expired in August. Shipping data provider Vortexa also confirmed that shipments had recovered to prewar levels, Reuters reported.

The recent export surge was driven by Saudi Arabia, which managed to restore a significant share of its shipments through both the Red Sea and the Persian Gulf following the September 10 attack on its East-West pipeline, Kpler said. That required more supertankers to shuttle crude through the Strait of Hormuz, according to trade sources and analysts. However, they said ship-to-ship transfer capacity had already reached its limit.

“Most of this month-over-month increase seen in September comes from Saudi Arabia, which is ramping up exports to regain market share from other Middle Eastern countries,” senior market analyst Xavier Tang said. “This increase in Middle East supplies will also help alleviate tightness in the oil market, especially for Asian refiners.”

Although shipments have recovered, they remain volatile and vulnerable to disruption, Saxo Bank head of commodity strategy Ole Sloth Hansen told Bloomberg.

Shipments of liquefied natural gas through the Strait of Hormuz also climbed in September to their highest level since the war began, according to ship-tracking data from Kpler and Bloomberg. At least three LNG tankers have exited the waterway since late last week, although outbound traffic remains more than 75% below prewar levels.

The market is closely monitoring LNG exports for signs of relief from a supply crunch that last month pushed prices in Europe and Asia to their highest level since late 2022. A sustained recovery could help bring prices down just before the winter heating season, when demand typically surges, Bloomberg notes.

The threat to shipping in the Strait of Hormuz remains high, with attacks on tankers in the region continuing. At least seven incidents were reported over the last week, Reuters wrote, citing shipping intelligence service Marisks. However, “the recent pattern of incidents may not necessarily represent deliberate targeting of individually selected merchant vessels,” its analysts said.

Meanwhile, the conflagration in the Middle East continues to expand. Yemen’s Saudi-backed government has launched a full-scale offensive to retake territory controlled by the Iran-backed Houthis. The rebel group is fighting inside of Yemen while also targeting vital energy infrastructure in Saudi Arabia.

“The risk premium has not disappeared simply because headline crude exports are recovering,” said Emily Ashford, head of energy research at Standard Chartered. “The Houthi-Saudi front has its own dynamics and its own escalation risks, which continue to put Saudi infrastructure and alternative export routes directly in the firing line.”

Energy markets will remain extremely sensitive to any suggestion that the East-West pipeline could be disrupted again, she added. On Monday, AFP reported that the pipeline had again been shut following another strike. People familiar with the matter told Bloomberg that it was operating normally.