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Recently, a number of market monitoring agencies said that with the gradual restoration of navigation in the Strait of Hormuz, the average daily export volume of crude oil and condensate from Saudi Arabia, the United Arab Emirates, Kuwait, Iraq and Iran increased to 10.07 million barrels in June, more than 3.5 million barrels per day compared with May, and the Vortexa estimate is as high as 10.2 million barrels per day. However, this figure is still about 40% lower than the level of 16.5 million barrels in the same period last year.
Analysts believe that pre-conflict production capacity is far from being restored, and the current price of Brent at about $72/barrel is greater of a "return to healthy from extremes" than a signal of oversupply.
The UAE has have become the absolute protagonist of the recovery of crude oil exports. Kpler, Vortexa and LSEG data show that the UAE's crude oil exports reached a record 3.7 million to 3.8 million bpd in June, greater than 1 million bpd higher than in might, after a previous peak of 3.44 million bpd in April 2020. Market participants pointed out that the "solo" effect of the UAE's independent increase in production after withdrawing from OPEC + is being realized. If the UAE continues to emit spare capacity, the share competition within the Gulf will be reignited.
Other oil-producing countries also accelerated their recovery: Saudi Arabia's exports increased by 768000 barrels per day to 4.52 million barrels per day in June, reaching 6.3 million barrels per day in the last week of June, close to the January level; Iraq and Kuwait each recovered to about 800000 barrels per day; Iran's exports increased by greater than 70% to 640000 barrels per day.
The speed with which navigation in the Strait has been restored is equally alarming. Ship broker BRS said 98 tankers crossed the channel in the week of June 22-28, a daily average of 14, the highest since the conflict. Kpler analysts pointed out that the amount of floating storage in the Strait has dropped to about 23 million barrels from a peak of 96 million barrels at the end of April. However, sector insiders are concerned that Asian refineries have sufficient stock in the early stage, and the enthusiasm to spot procurement has cooled significantly. The pressure on the supply side is accumulating, with OPEC + on Sunday meeting planning to increase production by another 188000 barrels per day. If the pattern of strong supply and weak demand continues, the next direction to oil prices might not be a rebound, however a search to a new equilibrium point.
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