Geoff Yu at BNY notes that improving flows through the Strait of Hormuz are easing Oil supply fears and supporting a lower Brent price profile. Kuwait and Qatar have restored crude shipments to about 70% of pre-war levels, lifting total Hormuz flows. As more Gulf barrels reach the market, the disruption premium in Oil prices continues to compress despite ongoing U.S.–Iran tensions.

Brent pressured by supply normalization

“Improving Hormuz flows are providing further reassurance on inflation. Kuwaiti and Qatari crude shipments have reportedly recovered to around 70% of pre-conflict levels, while broader traffic through the strait is also rising. Brent is falling again as supply fears ease, removing some of the energy-driven pressure on the global disinflation outlook.”

“Brent crude is holding near $87/bbl, well below its late-April peak above $120, as rising oil flows through the Strait of Hormuz ease fears of a prolonged supply shock. Kuwait and Qatar have restored shipments to around 70% of pre-war levels, while total flows through the strait have climbed to roughly 7mn to 8mn barrels a day from about 4mn in mid-July.”

“With more Gulf barrels reaching the market, the supply disruption premium in oil has continued to compress, even though Washington and Tehran remain deadlocked over control of the strait.”