Oil Exports Recover in Gulf Region, Prices Continue to Rise
According to market data analytics firm Kpler, crude oil exports from the Gulf averaged 24.6 million barrels per day in the week ending October 18, exceeding pre-US-Iran war averages. However, oil prices continue to rise. Brent crude is trading at its highest level since April, up more than 60% from pre-war levels.
Despite the increase in oil exports, market analysts point to concerns about the possibility of renewed hostilities between the US and Iran, dwindling oil reserves, and rising costs of transporting oil out of the region as contributing factors. Adi Imsirovic, a lecturer on energy systems at Oxford University, commented: “The market is accurately reflecting reality: there is still ample oil available for immediate delivery, but the end of this conflict is still in sight. In fact, the likelihood of escalating tensions is very high. Therefore, the futures market reflects this expectation.”
Shipping Costs Soar Amid Volatility
Shipping costs have skyrocketed due to increased insurance fees and logistical difficulties. According to data from the London Stock Exchange Group (LSEG), the cost of transporting oil has risen to $40 per barrel in recent weeks, about 10 times higher than usual. This is a result of the volatile situation in the Middle East, with 32 incidents recorded by the UK Maritime Trade Operations (UKMTO) as of October 30.
Isabel Figuerola-Ferretti, an expert on the oil market at the Pontifical University of Comillas in Madrid, Spain, said: “Oil is still being transported, but it is not running smoothly and is not stable. This should not be seen as a sign that things have returned to normal. The cost of transporting each barrel of oil has increased significantly.”
Uncertainty Remains Over Long-Term Supply Trend
Although market analysis data suggests that oil exports have at times reached pre-war levels in recent weeks, the long-term supply trend remains unclear. Pavel Molchanov, an investment strategist at Raymond James & Associates, is skeptical about whether supply has truly returned to pre-conflict trends.
Molchanov said: “The latest production data from the International Energy Agency for September shows that OPEC member countries in the Gulf region produced 15.8 million barrels per day, equivalent to 75% of the pre-war baseline.” He added that while oil exports have recovered, the market is still uncertain about the long-term supply trend.
In conclusion, despite the increase in oil exports from the Gulf region, prices continue to rise due to concerns over the volatile situation in the Middle East. Shipping costs have also skyrocketed, and uncertainty remains over the long-term supply trend.
Original Article: Oil flows from the Gulf region are recovering, so why are oil prices still rising? — Vietnam