Fighting has flared again between the US and Iran, tankers are struggling to move through the Strait of Hormuz, and yet Brent crude, the world's benchmark, has stayed below $100 a barrel this month, even as it has rallied.
Crude shipments out of West Asia have roughly halved since the conflict began seven months ago, falling from around 18 million barrels per day (bpd) to about 11 million bpd now, according to data from Argus. What follows is a look at the forces pulling prices in different directions.
Despite the disruption, meaningful volumes have continued moving through the strait. In the week before fighting resumed on August 30, roughly 8 million to 9 million bpd had been flowing through Hormuz, double the volume of the week before that, according to Rystad Energy's chief economist, Claudio Galimberti, reported Reuters.
Flows have since dropped to below 2 million bpd, but Galimberti noted that the daily moving average still sits around 4 million to 5 million barrels, a level he said puts Brent at a "fair" price of $95. Industry estimates place daily exports somewhat higher, between 6 million and 8 million barrels. Kpler data showed on Monday that no very large crude carrier had exited the strait since September 2, though notably, during the interim US-Iran peace deal in July, Hormuz exports had briefly touched pre-war levels of 16 million bpd.
Gulf exporters haven't simply absorbed the shortfall, they've adapted. Producers have turned to alternative routes and are expected to keep sending cargoes for ship-to-ship transfers outside Hormuz, softening some of the impact.
Saudi Aramco resumed loadings from its Ras Tanura port within the Gulf in August, though its Red Sea exports from Yanbu remain constrained by a naval blockade from Iran-aligned Houthi forces in Yemen. Yanbu exports fell to a six-month low of 1.429 million bpd in August, down from an average of 3.9 million bpd over the previous three months, according to provisional Kpler figures. Egypt's Sidi Kerir, used as an alternative port, saw exports more than double from June levels to reach 2.139 million bpd in August.
Elsewhere, Iraq, OPEC's second-largest producer, saw exports rebound to around 2.34 million bpd in August. The UAE's shipments held around 2.9 million bpd across July and August, having hit a record in June, while Kuwaiti exports recovered to roughly 1 million bpd over the same two months. Iran's own exports, by contrast, have fallen sharply under the continuing US blockade.
Non-OPEC producers are also stepping in. Jarand Rystad, founder of Rystad Energy, said the US, Canada and Guyana are together set to raise output by a combined 1.4 million bpd this year, partially offsetting the shortfall from West Asia.
Russian exports, meanwhile, held roughly steady at around 5.5 million bpd across July and August, down from a June peak of 6.4 million bpd, but still 23 per cent above February levels, according to Kpler data, even as processing at Russian refineries has declined following Ukrainian strikes on Russian plants. That said, Russia has downgraded its 2026 oil output forecast to a 17-year low, a shift that could eventually weigh on its export volumes too.
Prices aren't being shaped by supply alone. Rystad pointed to significant demand destruction in petrochemicals and transport fuels, running at 3.5 million bpd in the third quarter, down from 4.5 million bpd in the second. More than half of that decline is attributable to China, driven by rising transport electrification and a shift towards coal-based chemicals.
China, sometimes referred to as the "new demand OPEC" given its outsized influence on the market, cut seaborne crude imports to around 7 million bpd across July and August, down sharply from more than 11 million bpd in February. Beijing's substantial reserves, estimated by Kpler at 1.7 billion barrels, have also helped reassure markets that any near-term supply gap could be absorbed.
Here's where the picture gets more complicated. Spot premiums have climbed back to April levels, with Dubai and Oman crude trading $19 to $20 a barrel above Dubai quotes for cargoes loading in November, according to Reuters data. On Monday, Oman futures stood at $104.54 a barrel, while cash Dubai traded at $105.10.
"At the moment, it's telling us that physically things are incredibly tight," said David Fyfe, chief economist at Argus. "We've already got prices substantially above $100 a barrel and, even more important, you've got a diesel market that is screaming shortage."
The recent escalation between the US and Iran is expected to further curb Gulf exports just as demand rises, with refiners ramping up diesel output, a fuel that has already hit a record high price in the US.
The tightness in physical markets has prompted several banks to lift their price forecasts. Morgan Stanley now expects Brent to average $100 a barrel in the fourth quarter.
Goldman Sachs raised its Brent and West Texas Intermediate forecasts by $5 a barrel for December 2026 and for 2027, citing an expectation that shipping disruptions in West Asia will persist into next year. The bank now forecasts Brent at $85 a barrel and WTI at $80 for December 2026, with 2027 forecasts set at $80 and $75 a barrel, respectively.
