The Middle East’s oil export arteries are flowing again.
That’s what analysts at J.P. Morgan, including J.P. Morgan’s Head of Global Commodities Strategy, Natasha Kaneva, said in a J.P. Morgan report sent to Rigzone by Kaneva late Tuesday.
“With flows through the Saudi East-West pipeline restored, regional exports are now just 11 percent below pre-war levels – a remarkable recovery for a region still at war,” the analysts stated in the report.
“Over the past five days, the 10‑day average for total oil exports has held at 20.5 million barrels per day, or 89 percent of 2025 levels,” they added.
The analysts warned in the report, however, that this recovery is uneven.
“Crude flows have rebounded to 17.5 million barrels per day or 98 percent of pre-war levels, while product exports remain at just three million barrels per day, or 58 percent, underscoring that the crude market has largely normalized even as refined product supplies remain constrained,” they said.
The J.P. Morgan analysts revealed in the report that early signs of rising exports are already visible in India, which they described as “the largest nearby buyer”.
“In September, India’s imports from the Middle East and ‘unknown origins’ rose to 2.8 million barrels per day, up 1.2 million barrels per day from August, and exceeding 2025 levels,” they noted.
The analysts went on to state in the report that tanker availability does not appear to be the binding constraint on sustaining high flows through the Strait of Hormuz.
“Record freight rates, Hormuz-linked VLCC charters near $1.27 million per day, are still drawing in marginal tonnage, with owners effectively pricing and monetizing the security risk,” they highlighted.
“The premium for immediacy is now so acute that five- to ten-year-old VLCCs are being valued above $150 million, versus roughly $135 million for a newbuild,” they added.
“Regional producers also have meaningfully controlled freight capacity (e.g., Saudi’s Bahri fleet, ADNOC L&S, Kuwait’s KOTC, and Oman’s Asyad), helping sustain liftings even as the spot market tightens,” they continued.
The J.P. Morgan analysts also highlighted in the report that flows through Hormuz have nearly returned to late-June highs of nearly 13 million barrels per day, “led primarily by Saudi Arabia”. They warned, however, that “higher crossings should not be mistaken for improved safety – rather, they reflect the industry’s increasing ability to operate under sustained risk”.
According to the J.P. Morgan analysts, the “‘shuttle’ model is now extending beyond oil”.
“Most container traffic through the Strait is being carried by Abu Dhabi Ports-linked feeder vessels, while major global carriers remain largely on the sidelines,” they said.
Hormuz Flow Data Continues to Improve
In a report sent to Rigzone on Thursday by the HSBC team, analysts at the company, including HSBC Senior Global Oil and Gas Analyst Kim Fustier, noted that Hormuz flow data continues to improve, “helping to keep a lid on oil prices around $100 per barrel”.
“Saudi exports have driven much of the recovery, with a sharp rebound in transits via the Strait of Hormuz following disruption to the East-West pipeline,” the HSBC analysts said in the report.
“Based on estimates from various providers, we believe that liquids exports through Hormuz are averaging c10 million barrels per day – above the c6 million barrels per day assessed in early September, and a faster increase than we’d assumed in our base case,” they added.
“Total Middle East exports including flows bypassing Hormuz are close to 15 million barrels per day, c64 percent of pre-conflict levels,” according to the HSBC analysts.
In the report, the analysts highlighted that there is “a remarkably wide spread of estimates on Hormuz flows”, noting that these range from less than three million barrels per day to the mid-teens. The analysts also pointed out that some observers estimate that Middle East exports are nearly back to pre-conflict levels, “above 20 million barrels per day”.
The HSBC analysts outlined in the report that there are three possible reasons for data discrepancies.
“One, dark transits, ship-to-ship transfers, and incomplete AIS coverage mean Hormuz flow estimates are increasingly subject to large revisions, often days or weeks after the event,” the analysts said.
“Two, comparisons with pre-conflict levels are sensitive to methodology: some datasets include bypass routes such as Saudi Yanbu, UAE ADCOP and Omani exports, while others focus on Hormuz flows alone. As bypass volumes have increased, total Gulf exports have recovered more than Hormuz traffic,” they added.
“Three, crude is recovering faster than products, due to less complex logistics for VLCC transits,” they continued.
The HSBC analysts noted in the report that total Middle East crude exports “are indeed recovering” but warned that this doesn’t mean that the oil market “is anything like back to ‘normal’”.
“When Middle East exports last approached their pre-conflict levels in the June/July U.S.-Iran ceasefire, Brent fell to c$70 per barrel as a ‘mini-glut’ appeared and more crude was available than buyers could absorb,” they said.
“This time, Brent has remained above $100 per barrel. We doubt that a $30 per barrel gap is explained by a higher risk premium and lower global inventories vs June/July,” they highlighted.
The analysts went on to state in the report that physical markets are currently tight, despite the pick-up in Hormuz flows.
“Crude differentials are elevated, with Dated Brent c$17 per barrel above front-month ICE Brent, and futures backwardation is steep,” they noted.
“Spot freight rates are at record highs of over $1.2 million per day for VLCCs from the Middle East Gulf to China, equivalent to c20 percent of the delivered cost of crude,” they added.
“A large and growing share of Gulf crude is moving through costly shuttle systems, STS transfers and military-protected convoys, which may not be sustainable,” they continued.
“Margins for diesel and other refined products have come off their recent records but remain very high. All of this suggests that Middle East exports – at least for crude – are rising, but at enormous cost,” the HSBC analysts said.
Q3 Surprises
In a report sent to Rigzone late Tuesday by the Macquarie team, Macquarie strategists, including Peter Taylor, Head of Commodity Strategy at Macquarie Group, noted that the third quarter of 2026 “brought a number of surprises, including a rapid failure of the Islamabad MoU, escalation in the Red Sea, and a steady restoration of flows through the Strait of Hormuz”.
“For oil markets, decoding signal from noise has proven exceedingly challenging across this period,” the strategists said in the report.
“Moving forward, we have resigned ourselves to the prospect of a prolonged conflict, a liminal state of neither peace and unfettered flow through the Strait, nor all out war and altogether arrested Middle East exports,” they added.
“Instead, our base case moves to a slow and steady increase in volumes through the Strait and recovery in Middle East supply. Fundamentally, we think this speaks to a normalizing oil market in 2027, but acknowledge substantial uncertainty persisting in the outlook,” they continued.
The strategists noted in the report that, “following the revival of hostilities in late August, transits through the Strait of Hormuz have maintained their upward trajectory”. They pointed out that the market appears increasingly comfortable with the risks associated with the Strait of Hormuz, “as the rising frequency of tanker attacks in the Middle East Gulf has not translated into lower flow through the Strait”.
“We see parallels with the Tanker War during the latter stages of the Iran-Iraq War, when maritime trade continued despite persistent (and deadly) threats to oil shipments through the Gulf,” the strategists highlighted.
The Macquarie strategists went on to acknowledge in the report that there is a potential for “deals to be achieved and escalation to resume along this path, each in turn opening up new pathways”.
“Further, the progress of oil volumes through the Strait can exert its own gravity on the situation, at times enabling diplomacy or triggering escalation,” they warned.
“While we continue to discount the prospect for a rapid, comprehensive, and lasting diplomatic resolution to the conflict, we cannot dismiss it entirely,” they said.
“The readthrough in this scenario would be clear for us, heavy oversupply, sharply falling prices, and a more timely normalization of refining margins as crude and refinery availability outpaces demand recovery,” they noted.
The Macquarie strategists also highlighted in the report that triggers for more bullish outcomes “clearly anchor on a resumption in large-scale hostilities from the United States”.
“Although physical markets may be growing increasingly comfortable with the current risk profile through the Strait, a state of all-out war may not be tenable,” they said.
“Likewise, if the surging volumes through the Strait are not attributable to a weakening of Iran’s grip on the channel, but more indicative of diplomatic overtures/side agreements, escalation risk may be more profound,” they warned.
“While we do not believe this to be the case, we must remain open to alternative explanations for developments in a very murky Strait,” the continued.
Market Watching Hormuz, ME Outflows Closely
In a Rystad Energy market update sent to Rigzone late Tuesday, Claudio Galimberti, Rystad Energy Chief Economist, highlighted that the market is “watching Hormuz and the total Middle East outflows closely”.
A McKinsey report sent to Rigzone last week, which was penned by several McKinsey representatives, including McKinsey Global Institute Chair and Senior Partner Shubham Singhal, stated that the on and off closure of the Strait of Hormuz is the most consequential in a succession of disruptions reshaping global energy and its flows.
In a report sent to Rigzone on September 25 by the HSBC team, analysts at the company, including Fustier, highlighted that the company had made “substantial commodity price upgrades on 8 September, which assume a partial, gradual recovery in Strait of Hormuz flows”.
“At that time, we raised our Brent assumption to c$90 per barrel for 2026 (from $80 per barrel) and $85 per barrel in 2027 (from $65 per barrel),” the analysts noted.
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