Oil prices experienced minimal change as crude oil exports from the Persian Gulf region, specifically Saudi Arabia and the United Arab Emirates, neared their pre-war rates. This normalization of shipments, following an interim peace agreement between the US and Iran, has significantly eased concerns about supply disruptions that had previously driven prices up. The increased flow, particularly through the Strait of Hormuz, has contributed to a market surplus, causing futures prices to decline.
Saudi Arabia, the world's leading exporter, shipped approximately 6.3 million barrels per day in the six days leading up to Wednesday, which is roughly 90% of its pre-war February levels. This figure combines exports from both Yanbu and Saudi Arabia's Persian Gulf facilities and marks a substantial increase from June's average of about 4.5 million barrels per day. The kingdom also made an unusual move by selling at least 6 million barrels of crude on an ad-hoc basis to Asian customers, departing from its standard practice of long-term deals, and chartered two supertankers to collect an additional 4 million barrels, signaling further export ramp-ups.
Neighboring United Arab Emirates also played a crucial role in this rebound, restoring its oil exports to over 3.9 million barrels per day, matching its pre-conflict rates. A US official estimated that the total oil supply through the Strait of Hormuz has now reached more than 10 million barrels per day. This surge in supply has resulted in Brent futures falling to nearly $70 a barrel and US West Texas Intermediate dipping to almost $67 a barrel, marking their lowest since before the Iran war began on February 28. Analysts like Natasha Kaneva of JPMorgan Chase & Co. noted that this influx of oil is entering a market that, for now, doesn't need it, exacerbating the oversupply.
