The price of the global crude benchmark, Brent, is once again toiling around $100 per barrel as its reasons for trading much beyond the psychological three-digit mark are being eroded.
That’s what John Evans, an analyst at PVM Oil Associates, which is part of the IP ICAP Group, said in a market analysis sent to Rigzone on Tuesday.
“It is … very hard to complete a picture on how many oil tankers are making passage through Hormuz for the data is retrospective rather than live,” Evans noted in the analysis.
“With the attacks on shipping increased, there is little doubt that the reported return to export volumes from the Middle East to pre-war levels will be adjusted accordingly to the downside, but for now the assumption of more crude getting through has dampened price fervor,” he added.
Evans also highlighted in the analysis that Saudi Arabia “unexpectedly” cut its official selling price (OSP) for November delivery into Asia.
“Through a mixture of ship-to-ship (STS) transfers and alternative delivery routes, the OPEC kingpin has increased exports to six million barrels per day, the monthly average of 2025, according to Kpler,” Evans pointed out.
“However, to make this amount of crude more marketable, the cut in OSP is designed to take into account the record freight rates which are now dogging international shipping,” he added.
“According to LSEG data, booking a charter VLCC from the Persian Gulf to China a year ago was $80,000 per day, as of Friday it was $1.2 million per day. Crude buyers need all the help they can get, and prices are thus adjusting,” he continued.
Evans went on to note that there “remains a feeling” within the market that “we are nearing some sort of crisis point; an inflection, or nexus, whatever your favorite lexical expression is to indicate a convergence of events and an eventual outcome”.
“When looking for a perfection in oil price prediction there is nothing finer when a sort of trinity makes itself known,” he said.
“There ought to be a fundamental reason, geopolitical sympathy and aligning technical analysis which, when combined, will give a Eureka insight, well, hypothetically,” he added.
“It seems our target date when we might expect to ponder a meeting of these conditions is the U.S. mid-term elections. It is also worth considering the Israeli General Election on the 27th of October,” he revealed.
“The trouble with this, is, as much as any of us want to believe that we are heading for a confluence, the reality is that we are faced with a delta,” Evans warned.
“Our market drivers are now widespread, as yet unseen, and often unconsidered and each rivulet spreading into the unknown need be explored for being a breakthrough or indeed a dead end,” he continued.
Evans stated in the analysis that “war is a villainous bed fellow to be relied upon in giving reliable data or even narrative”.
He pointed out that when U.S. President Donald Trump says the Strait of Hormuz is open, “the prices of oil fall making them more tolerable for U.S. customers and reducing Iranian petrodollar income”. He added, however, that “a reverse shout by Iranian hierarchy acts in the opposite”.
Oil Caught Between Two Forces
In a separate market analysis sent to Rigzone on Tuesday, Naeem Aslam, CIO at Zaye Capital Markets, outlined that, from Zaye Capital Markets’ view, oil “remains caught between two competing forces: improving physical supply and persistent geopolitical risk”.
“Middle East crude exports have recovered sharply, with Gulf flows excluding Iran returning to more than 81 percent of pre-war levels in September, while emergency stock releases are adding further barrels to the system,” Aslam noted.
“That improves the immediate supply picture, but shipping risk around the Strait of Hormuz and continued tension involving Iran still keep freight, insurance and disruption premiums elevated,” he added.
President Trump’s latest comments reinforce this split, according to Aslam.
“He says gasoline pressure is now being driven more by refinery problems than the Strait itself, expects gasoline to ‘DROP LIKE A ROCK’ when the war ends, and says both Europe and the U.S. are releasing diesel into the market,” Aslam pointed out.
“Those remarks are bearish for crude if improving oil flows and reserve releases continue, but refinery outages, attacks on Russian processing capacity, and uncertainty around Iran remain supportive for refined products and keep part of the geopolitical premium alive,” he said.
“This is why oil can soften even while diesel and product markets remain tight: crude availability is improving faster than refining capacity and product supply,” he added.
Aslam went on to state that yesterday’s U.S. economic data added another layer to the oil outlook.
“September ISM Services PMI eased to 54.9 from 55.4, while new orders stood at 59.8. Employment improved to 50.1 from 47.8, but prices paid climbed to 74.0 from 72.6,” he pointed out.
“These figures show that demand conditions remain expansionary, which supports expectations for continued transport, logistics, and industrial fuel consumption,” he said.
“At the same time, the sharp rise in input prices shows that inflation pressure has not fully disappeared, which can keep monetary conditions restrictive and eventually weigh on demand if borrowing costs stay high for longer,” he added.
Aslam went on to note that, with no major U.S. economic release scheduled today, Zaye Capital Markets expects oil prices to react more heavily to Middle East exports, refinery disruptions, inventory data, the U.S. dollar, and any fresh change in Iran-related risk.
“OPEC+ is also important because unchanged production policy limits the risk of a sudden supply surge, while the IEA’s broader outlook still points to a market where supply recovery and weaker demand growth are competing with geopolitical disruption,” Aslam said.
“From our perspective at Zaye Capital Markets, the key question is whether physical supply normalization can continue faster than geopolitical risk develops,” he added.
“If exports improve and refinery bottlenecks ease, Brent could struggle to hold above $100. If shipping disruption or refinery damage worsens, the market could quickly rebuild a stronger risk premium,” he continued.
Distorted Price Action
In a report sent to Rigzone on Monday by the Skandinaviska Enskilda Banken AB (SEB) team, SEB Chief Commodities Analyst Bjarne Schieldrop noted that last week’s oil price action was distorted by the rolling of the November contract.
“The December Brent crude oil contract rose $4.8 per barrel, or five percent, last week,” Schieldrop pointed out.
“Much of that gain was due to the roll-yield as the November contract rolled off as the M1 contract to be replaced by the Dec-26 contract. The backwardation between the Nov and the Dec contract averaged $6.5 per barrel over the last three days before 1 October and the rolling of contract,” he said.
“The ‘gain’ over the week was thus not much of a gain at all. If we just look at the M1 contract it instead fell two percent Friday to Friday though that disguises the change in the underlying contract over the week,” he added.
“The Brent M1 contract closed the week at $102.25 per barrel. The announcement of 100 million barrels of oil from G7 SPR helped to ease prices at the end of last week. Though that effect seems to have faded today [Monday],” he continued.
In this report, Schieldrop pointed out that the price of oil in Europe yesterday was $140 per barrel.
“Back to the complete distortion of oil and product prices in time and geography – the Dated Brent ‘spot’ price averaged $123.3 per barrel last week but that is really the average Day 10 to Day 20 of the ‘daily Dated Brent’ forward curve,” he said.
“But since this curve is in very steep backwardation, the real prices for physical oil cargoes at the very front-end of this daily curve sits well above the average of this daily curve,” he added.
“The physical premiums for Oseberg and for Fortis crude takes this steep backwardation into account. The full price average for Oseberg and Fortis last week were thus $142.5 per barrel and $140.2 per barrel,” he pointed out.
“That is way, way higher than both the Dated Brent ‘spot’ price last week and the average of the Brent futures price, the M1 contract, which averaged $103.2 per barrel last week and is trading at $102.4 per barrel,” he stated.
Schieldrop went on to warn that extreme prompt tightness may fade or get much worse.
“The extreme prompt tightness and backwardation we see in the market today is a display of today’s prompt situation and not necessarily a guide for the future,” he said.
“The much more relaxed Brent M1 contract (today December) at $102.4 per barrel is maybe a reflection of an oil market either betting or expecting that today’s problems will be resolved somehow over the coming three months,” he added.
“Or, that the current flow of oil out of the Strait of Hormuz at 17.5 million barrels per day (close to normal) will be sustained or even increase over time,” he continued.
“But we don’t know exactly why the flow of crude, products, and LNG out of the Strait of Hormuz has been able to sustain at around 17.5 million barrels per day since mid-September (it seems),” he pointed out.
“Is it because shippers are better at managing the risk or more willing to take the risk of transiting? Is it because the U.S. military assistance is better? Or is it because Iran is paid by exporters and is allowing exports out through the Strait of Hormuz?” Shieldrop questioned.
Schieldrop went on to outline that, although physical crude in Europe on Monday was $140 per barrel, “or two times the ‘normal’ price of $70 per barrel”, if tightness escalates further, “then price of crude in Europe could go to three times, four times, or even five times the normal level”.
Significant Upward Price Revision
In a BMI report sent to Rigzone by the Fitch Group on Monday, analysts at BMI, a unit of Fitch Solutions, revealed that they had made a “significant” upward revision to their forecast for Brent futures.
The report highlighted that BMI had raised the 2026 annual average from $83 per barrel to $93 per barrel, and the 2027 annual average from $71 per barrel to $81 per barrel.
“The revision reflects our evolving outlook on the U.S.-Iran war,” the BMI analysts stated in the report.
“Whereas our previous forecast had assumed a preliminary deal to reopen the Strait of Hormuz would be reached in Q3 2026, we now believe such a deal is unlikely to occur before Q1 2027,” they warned.
The analysts projected in the report that extended disruptions to regional oil flows will see price pressures extend and build across the coming three to six months, “compounded by ongoing supply-side constraints stemming from the Russia-Ukraine war”.
“Meanwhile, depleted inventories, strong product cracks, and expectations for a more prolonged engagement will see refiners ramping up their throughput, increasing the call on crude,” they added.
“Limited strategic storage releases and greenfield supply additions will be insufficient to plug the lingering deficit, with global stocks continuing to draw,” they said.
“As a result, prices will zigzag higher, as repeated cycles of escalation and deescalation between Washington and Tehran meet with progressively lower inventory levels and fewer fundamental brakes on future rallies,” they went on to note.
The analysts highlighted in the report that they are now forecasting that Brent futures will average $107 per barrel in Q4 2026 and $112 per barrel in Q1 2027, up from $91 per barrel in Q3 and $89 per barrel in the year to date.
“This assumes that rising demand for crude and continued constraints on the supply side combine to erode physical market buffers, leaving Brent increasingly exposed to renewed bouts of geopolitical escalation and unplanned production outages,” the BMI analysts stated in the report.
These analysts highlighted that, over most of September, the front-month contract fluctuated between $100 and 110 per barrel and peaked at $108.8 per barrel on the September 15 close before falling to $104 per barrel on September 30.
“A steeply backwardated term structure and the rollover to December expiry for the prompt contract (compounded by some bearish news flow) dragged Brent back below $100 per barrel during intraday trading on October 1, before prices rebounded to above $102 per barrel at the close,” the BMI analysts highlighted in the report.
“There is a stark divide in the market narrative around oil, with one camp claiming extreme scarcity, the other abundance,” they pointed out.
“Overall, sentiment has skewed gradually more bullish over recent months, with the ratio of long to short positions held by managed money in Brent crude rising from a low of 1.6 in early July to a high of 4.1 in mid-September,” they noted.
The analysts warned, however, that a recent reversal in positioning combined with some downward pressure on prices since mid-September poses downside risk to their short-term view.
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