Brent Drops 17% to $91 as Middle East Crude Flows Recover

Middle East crude oil exports have recovered to near pre-war levels, sending Brent crude down roughly 17% over five trading days to trade just above $91 per barrel on Tuesday, according to Crude Oil Prices Today | OilPrice.com. Despite rebounding Persian Gulf crude shipments, elevated war insurance premiums and record tanker rates have pushed transportation costs up to $30 per barrel, compared to around $5 per barrel prior to the conflict.

High Shipping Costs and Aramco Pricing

The surge in shipping expenses has forced Middle Eastern producers to lower physical crude prices to remain competitive among price-sensitive buyers in Asia. Saudi Aramco recently slashed its official selling price for flagship Arab Light crude loading in December for Asia by $2 per barrel, marking a discount of $6.50 per barrel against the Oman/Dubai average. This represents Aramco's steepest discount to the benchmark since May 2020. Meanwhile, refined product exports out of the Middle East remain depressed at just 37% of normal levels, according to Saxo Bank.

Depleted Global Supply Buffers

Despite signs of a short-term crude oversupply, global inventories remain severely depleted. Energy executives warn that rebuilding supply buffers will require significant time even if geopolitical tensions ease. Saudi Aramco Chief Executive Amin Nasser stated that refilling global inventories while meeting ongoing demand could take up to two years. Additionally, ADNOC Chief Executive Sultan Al Jaber noted that the regional crisis forced nearly 1 billion barrels of crude to be drawn from global inventories.

Key facts

• Brent crude dropped 17% over five trading days to trade just above $91 per barrel.
• Crude transport costs rose from $5 to as much as $30 per barrel due to war insurance premiums and high tanker rates.
• Saudi Aramco cut its December Arab Light price to Asia by $2 per barrel to a $6.50 discount against the Oman/Dubai benchmark.
• Middle East refined product exports remain at 37% of pre-war normal levels.
• Nearly 1 billion barrels of crude have been drawn from global stockpiles during the Middle East crisis.