Middle East crude exports near pre-war levels as Gulf freight costs hit $30/barrel

Vessel-tracking services cited in the report show Middle Eastern crude flows, including exports through the Strait of Hormuz, have returned close to pre-war levels after months of disruption. The report says vessel-tracking services have signaled the recovery for more than a month. Brent, an international crude benchmark, fell about 17% in the five trading days after U.S. midterm elections, to just above $91 a barrel, as traders read rebounding Gulf exports as signs of a possible near-term glut. Yet refiners and buyers have not seen a comparable fall in delivered costs.

The physical market shows a split between volume and price. Dubai benchmark futures moved into contango, a structure where later delivery costs more than immediate delivery, suggesting immediate supply concerns have eased. Aramco cut its December Arab Light price for Asia by $2 per barrel, to a $6.50 discount to the Oman/Dubai average, its steepest discount in the cited series. Transport costs, however, rose from about $5 per barrel before the conflict to as much as $30, and at times higher.

The divergence matters because Middle East producers gain by restoring export volumes and preserving market share, while buyers gain only if lower benchmark prices reach them. They do not, because war-risk premiums, tanker rates and ship-to-ship transfers in the Gulf of Oman absorb much of the discount. The report recalls a three-week U.S.-Iran ceasefire in July that allowed millions of barrels to leave the Strait unhindered, but says attacks on vessels have intensified in the past month and inefficient shuttle movements tie up tanker capacity.

The stakes are fiscal and industrial. Asia’s price-sensitive buyers receive cheaper Middle East grades, but refiners still pay for insurance and freight, which can pass into diesel, jet fuel and petrochemical feedstock costs. Gulf exporters, meanwhile, accept deeper discounts to keep barrels moving, reducing revenue per barrel even as volume rises. Industry leaders cited in the report say rebuilding global oil stocks could take up to two years. The episode shows how energy security is now a logistics problem as much as a supply problem, with Strait of Hormuz risk pricing itself into every shipment.