With Saudi Arabia's East-West pipeline back in operation, the Middle East's oil export artery has reopened, and the crude market is undergoing a notable supply recovery.

According to the latest research report released by JPMorgan on September 29, the 10-day average of total Middle East oil exports has rebounded to 20.5 million barrels per day, equivalent to 89% of the 2025 pre-war level, leaving a gap of just 11%. JPMorgan's commodities research team has concluded that the crude market has largely normalized. This means that although regional conflicts persist, a substantive recovery on the supply side has been confirmed at the data level.

However, the recovery is uneven. Crude flows have rebounded to 17.5 million barrels per day, recovering to 98% of the pre-war level, while refined product exports stand at only 3 million barrels per day, just 58% of the pre-war level. This means that while the crude market has broadly normalized, the shortfall in refined product supply remains significant, and the relevant markets continue to face structural pressure.

Crude and Refined Products: A Clearly Divergent Recovery

The report's data show that this rebound in Middle East oil exports has displayed a distinctly bifurcated internal pattern.

On the crude side, the flow of 17.5 million barrels per day is already close to the pre-war normal level of about 18 million barrels, with a recovery ratio as high as 98%, indicating that upstream production and crude transportation have essentially returned to normal operation.

The refined products picture is entirely different. Current exports of 3 million barrels per day represent only 58% of the pre-war normal level of about 5.2 million barrels, a shortfall of more than 40%. This means the Middle East's refining capacity or export infrastructure remains significantly constrained, and the tight supply of refined products such as diesel, jet fuel, and gasoline will be difficult to fully eliminate in the short term.

For the energy market, this divergent pattern means that the crack spread between crude and refined products may continue to face pressure, and the trajectory of refinery margins warrants sustained attention.

India's Import Data Confirms a Demand-Side Recovery

The recovery in Middle East oil exports has already been validated on the downstream demand side, with the most direct signal coming from India — the largest nearby buyer of Middle East oil.

JPMorgan data show that India's crude imports from the Middle East and "unknown origins" rose to 2.8 million barrels per day in September, a sharp increase of 1.2 million barrels per day from August, and already above the full-year 2025 average level.

This data indicates that as Middle East export channels are gradually cleared, buyers are actively restocking or returning to normal purchasing rhythms. The rapid rebound in India's imports reflects both a substantive improvement on the Middle East supply side and a re-energizing of regional crude trade flows.

The Strait of Hormuz: Risk Pricing Under High Freight Rates

Traffic through the Strait of Hormuz has approached its recent high from late June, at roughly 13 million barrels per day, with Saudi Arabia as the main contributor. But JPMorgan cautions that the rise in transit volumes does not signal an improvement in the security situation, but rather reflects the industry's enhanced ability to operate under persistent risk conditions.

The freight market's performance confirms this assessment. VLCC charter rates linked to Hormuz have approached a historic high of nearly $1.27 million per day, and the elevated freight rates are drawing marginal capacity into the market, with shipowners effectively pricing and profiting from security risks.

This "spot premium" has distorted the valuation logic of the secondhand vessel market — VLCCs aged 5 to 10 years are now valued at more than $150 million, above the newbuild price of about $135 million. Meanwhile, regional producers' own shipping capacity resources — including Saudi Arabia's Bahri fleet, ADNOC L&S under Abu Dhabi National Oil Company, Kuwait's KOTC, and Oman's Asyad — have provided important support for maintaining normal liftings against the backdrop of a tightening spot market.

The "Shuttle" Model Extends to Container Shipping

JPMorgan notes that this "shuttle" model of maintaining operations in a high-risk environment is no longer confined to oil transport and is spreading into the container shipping sector.

Currently, most container cargo through the Strait of Hormuz is carried by feeder vessels associated with Abu Dhabi Ports Group, while major global container liner companies remain largely on the sidelines. This pattern indicates that, with geopolitical risks yet to subside, regional port operators are filling the gap left by large international shipping companies and accumulating market share in the process.

For participants in the commodities market, these dynamics mean that the logistics bottlenecks in Middle East oil supply are gradually being eased, but elevated transport costs and persistent security risks will remain important variables affecting crude landed prices and trade flows.