Gulf oil exports recover above prewar levels despite Hormuz tanker war: 40% of shipments now bypass the strait via Saudi/UAE pipelines (Oct 21)
What happened
Oil prices rebounded Wednesday after a volatile Tuesday, with December Brent crude futures rising 1.3% to $110.19 a barrel and December WTI gaining 1.2% to $98.97, as traders weighed renewed threats to Strait of Hormuz shipping against a surprisingly strong recovery in Middle East oil exports. The Wall Street Journal reported that Middle East oil shipments have surpassed prewar levels: flows through the Strait of Hormuz plus alternative export routes averaged more than 24 million barrels a day in the week through Oct. 18, above the prewar level of 23.3 million barrels a day, according to analytics firm Kpler. Around 40% of Gulf oil shipments now bypass the Strait of Hormuz entirely — up from 17% before the war — as Saudi Arabia and the UAE make greater use of pipelines and other overland routes. On the conflict front, Iran's Islamic Revolutionary Guard Corps said Tuesday that two more oil tankers caught fire after striking mines south of the Strait of Hormuz, while the Saudi-led coalition said Wednesday it had intercepted drones launched toward the kingdom, including one targeting the Eastern Province, a major oil-producing region.
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Who’s affected
- Energy majors and the XLE complex: recovering flows cap the war-premium thesis that has buoyed oil prices near five-month highs. Shipping and tanker stocks face downside as the rerouting recovery undercuts record-high tanker rates. Airlines and transport sectors benefit from any relief in jet-fuel/crude costs, as do inflation-sensitive sectors (consumer, retail) via lower headline inflation risk.
Sources