Persian Gulf crude oil exports surged to over 14 million barrels per day last week. This level has exceeded 14 million barrels per day for the first time since the onset of the Iran war on February 28.
Significant Increase in Crude Oil Exports
According to published data, Persian Gulf crude oil exports have increased by more than 210% compared to the low of about 4.5 million barrels per day in March. The four-week average of exports has now reached about 14 million barrels per day, the highest level in the past six months. Despite this increase, Persian Gulf crude oil exports remain about 20% lower than pre-war levels and have returned to about 80% of the usual amount before the conflict began.
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Security Developments and Shipping Routes
The increase in oil flow has occurred as shipping security in the Strait of Hormuz has improved, and with the increased U.S. military presence, a shipping route along the coast of Oman has been established. This route has allowed tankers and oil transport convoys to resume passage through the Strait of Hormuz, reviving part of the oil export flow in the region that was severely disrupted in the early months of the war.
The increase in crude oil exports indicates that if a minimum level of security is established in shipping routes, the oil market can rapidly recover a portion of its lost supply.
State of the Petroleum Products Market
However, the state of the petroleum products market remains different from the crude oil market. Shipments of products such as gasoline, diesel, and jet fuel are still about 50% of pre-war levels. This means that the pace of recovery for product flows has been nearly half that of crude oil exports.
One reason for this situation is the higher transportation costs of petroleum products compared to crude oil. On the other hand, some refineries in the Persian Gulf region that were damaged in the early stages of the war have not yet fully returned to production.
Thus, although crude oil exports are on the path to recovery, the fuel market continues to face supply shortages and severe pressure, and a full return to pre-war conditions may take more time.
Implications for the Global Energy Market
Recent developments have an important implication for the global energy market; the return of crude oil to the market does not necessarily mean that the petroleum products crisis is resolved. While Persian Gulf oil exports have reached about 80% of pre-war levels, the flow of gasoline, diesel, and jet fuel is only about 50% of pre-war levels. Therefore, the main bottleneck in the current energy market is more about refining capacity, product transportation, and the return of damaged refineries to production.
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