More Oil Moves Through Hormuz, but Supply Still Looks Tight

Dow Jones
Yesterday

Benchmark Brent crude futures rose to around $100 a barrel today, building on gains of about 8% over the month of September that came in spite of a recovery in Middle East oil flows.

Meanwhile, dated Brent, the benchmark that reflects oil for actual physical delivery, remains significantly above futures prices, a sign that actual barrels are in short supply. It settled at around $121 a barrel yesterday, according to price reporting agency Argus Media.

"Physical markets are currently tight despite the pick-up in Hormuz flows," wrote Kim Fustier, senior global oil and gas analyst at HSBC. "Total Middle East crude exports are indeed recovering, but this doesn't mean that the oil market is anything like back to 'normal'," she said.

She added that in June and July, the last time exports from the Middle East approached their preconflict level, Brent futures fell to around $70 a barrel as a mini-glut appeared. This time, Brent has remained above $100 a barrel. "We doubt that a $30 a barrel gap is explained by a higher risk premium and lower global inventories versus June and July," she said.

While oil flows are improving, Iranian attacks on vessels continue.

Just this week, maritime security firms identified three oil tankers struck by unknown projectiles in separate incidents within the Strait of Hormuz. Two of them are managed by Adnoc Logistics & Services, the maritime logistics arm of state-owned oil giant Adnoc.

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