Contradictory data on shipments through Hormuz rocks oil prices

Oil prices remained volatile on Thursday, September 24, amid conflicting estimates of shipment volumes through the Strait of Hormuz and new diplomatic signals about ending the war with Iran. After a morning decline, global benchmark Brent turned higher and exceeded $103 per barrel.

One of the main factors for the market were new US statements about the resumption of oil flows through the Strait of Hormuz. US Treasury Secretary Scott Bessent told Fox News that around 17 million barrels of oil per day sometimes pass through the strait.

However, estimates by market participants differ significantly. According to Clarksons Research, about 8 million barrels per day passed through Hormuz in early September. Such a wide gap in assessments makes it difficult to understand how much shipments through the key route for the global oil market have actually recovered.

In parallel, investors are monitoring diplomatic contacts between Washington and Tehran. Iranian President Masoud Pezeshkian expressed readiness to return to negotiations to end the war, which has been going on for almost seven months, but stressed that Tehran would not agree to negotiations under pressure.

At the same time, Iran is not ready to ensure full freedom of navigation through the Strait of Hormuz as long as US sanctions and the naval blockade remain. During the UN General Assembly, the parties already held hours-long indirect talks through intermediaries. Tehran's conditions reportedly included ending the blockade and unfreezing Iranian assets.

Another factor that could ease tensions in the oil market is the restoration of alternative supply routes. Saudi Arabia is preparing to bring back the East-West pipeline, which allows transporting oil to the Red Sea bypassing the Strait of Hormuz. Its capacity is about 7 million barrels per day, although it is not yet clear what volume of exports will actually be restored.

It is the combination of these factors that causes oil prices to change direction quickly. On one hand, increased actual shipments through Hormuz, the possible resumption of the Saudi route, and US-Iran negotiations reduce the risk of shortage. On the other hand, the lack of a final agreement and a significant spread in estimates of the actual oil flow keep a high geopolitical premium in prices.

The day before, diplomatic signals had already pushed Brent below $100 per barrel, but the market quickly recovered part of the decline. This shows that traders are not yet ready to price in a stable recovery in shipments without concrete agreements on the Strait of Hormuz and an end to hostilities.

Based on materials from: Bloomberg, Al Jazeera, Financial Times