Middle East oil exports return to prewar levels

“Middle Eastern oil exports have returned to prewar levels as shipping companies use alternative routes to bypass chokepoints such as the Strait of Hormuz targeted in the conflict. In the week to October 18, shipments from Gulf oil producers excluding Iran averaged 24.6mn barrels a day, higher than the 23.3mn prewar average,” reports the Financial Times.

That takes the seven-day average for exports to its highest level since mid-February, days before the US and Israel struck Iran, igniting a war that has stymied exports from the world’s biggest oil-producing region. The figures, which are preliminary, are far more volatile than before the war. They include the Strait of Hormuz — through which the vast majority of the region’s prewar exports passed — as well as ship-to-ship transfers just beyond the narrow waterway and flows from Red Sea ports. Shipments through Hormuz itself are still more than a third lower than before the war, the data shows. Despite the rebound in the region’s exports, the oil price has been rising in recent months as markets for some oil products show increasing signs of strain, and on Tuesday Brent crude, the international benchmark, hit its highest level since May. On Wednesday it traded at $108.77 a barrel, flat on the day.

Saudi Arabia routed a lot of oil through its Red Sea port of Yanbu in response to attacks on ships sailing through the Gulf, but flows through this alternative route have dipped periodically in response to attacks on the pipeline that serves the port and on nearby ships. For instance, flows through Yanbu were lower following an attack in mid-September on the pipeline that connects Saudi oil production to the port. Those volumes have since rebounded after Saudi Aramco completed repair work on the pipeline.

Persian Gulf oil is making its way overland through Syria to the Mediterranean.

The Iran War temporarily reduced the flow of oil to the rest of the world from the Persian Gulf, driving up oil prices worldwide. But growing oil production in Brazil and Argentina kept oil prices from rising more, by making up for some of the lost oil.

Less oil will need to pass through the Strait of Hormuz in the future. Le Monde reported that the United Arab Emirates is expanding a pipeline to the Gulf of Oman which is expected to carry 3.6 million barrels per day by next year —nearly the UAE’s entire current oil output. “Saudi Arabia is considering expanding its pipeline to the Red Sea, and Iraq has signed an agreement with Syria to revive a pipeline to the Mediterranean. A study from Goldman Sachs estimates that 60 percent of the Gulf’s pre-Iran War oil exports could be protected from disruptions in the Strait of Hormuz by the end of 2028,” reports The Doomslayer.

Oil production in Brazil has risen from 3 million barrels per day in 2022 to about 4.5 million barrels per day in 2026.

The South American country of Guyana is rapidly expanding offshore oil production. It now has among the highest per capita oil production on Earth, producing more than 900,000 barrels of oil per day, despite having only 840,000 people. It was once the poorest country in South America, but now its per capita income is higher than any other country in the Americas (except perhaps the United States).