Oil Prices Stay Above $100 Despite Middle East Supply Recovery

Global crude oil prices remain above $100 per barrel despite a recovery in Middle East supply volumes. Flows through the Strait of Hormuz reached 14.2 million barrels per day in late September, the highest level since the outbreak of war between the United States, Iran, and Israel on February 28.

Market stability is hindered by severe logistical bottlenecks, including maritime insurance costs and tanker freight rates that have surged from $30,000 to over $1.2 million per day on some routes. The Group of Seven announced the release of up to 100 million barrels of emergency oil and diesel stocks to lower costs, but prices have remained elevated. This is compounded by five-year low global inventories and increased demand.

Geopolitical tensions continue to disrupt the market. The United States has deployed additional troops and an aircraft carrier to the Persian Gulf following an attack on Iran. In response, Iran has attacked ships in the Strait of Hormuz. Additionally, Houthi forces declared a blockade of Saudi Arabian shipping in the Red Sea. Saudi Arabia initially diverted exports via the East-West Pipeline, but attacks by Iranian-backed Iraqi militants in early September forced Riyadh to reroute volumes back through the Strait of Hormuz.

A global refining crisis has further spiked diesel prices. Ukrainian drone strikes have knocked dozens of Russian refineries offline, curtailing exports from major hubs. These factors have created historic diesel price highs, placing political pressure on Donald Trump ahead of midterm elections.