Global oil benchmark Brent crude has rallied this month but stayed below $100 a barrel despite recent escalation in the US-Iran conflict that has disrupted Gulf exports from the Strait of Hormuz and the Red Sea.

Crude oil shipments from Middle East producers are at about 11 million barrels per day (bpd) now, from 18m bpd before the US-Israeli war on Iran began seven months ago, according to Argus.

Here are some of the factors driving oil prices:

Significant volumes have been able to flow through Hormuz

In the week before fighting erupted again on August 30, roughly 8m to 9m bpd had been flowing through Hormuz, double the previous week’s volume, said Rystad Energy’s Chief Economist Claudio Galimberti.

While flows have since fallen to below 2m bpd, the daily moving average is still around 4m to 5m barrels, which puts Brent at a “fair” price of $95, Galimberti said. Industry estimates put daily exports between 6m and 8m barrels.

There has been no visible very large crude carrier exiting the strait since September 2, Kpler data showed on Monday.

During the interim US-Iran peace deal in July, Hormuz exports touched pre-war levels of 16m bpd.

Gulf exporters are using alternative routes and means

Gulf producers have found alternative routes and are expected to continue sending cargoes for ship-to-ship transfers outside of Hormuz, mitigating some of the earlier shortfall.

Saudi Aramco resumed loadings from its Ras Tanura port inside the Gulf in August, although its exports from Yanbu in the Red Sea remain under pressure from a naval blockade by the Yemeni Houthis. Yanbu exports hit a six-month low of 1.43m bpd in August, from an average of 3.9m bpd in the previous three months, provisional Kpler data showed.

Exports from the alternative port of Egypt’s Sidi Kerir hit 2.14m bpd in August, more than double June volumes.

Exports from No.2 Opec producer Iraq rebounded in August to around 2.34m bpd.

Shipments from the United Arab Emirates (UAE) hovered around 2.9m bpd in August and July after hitting a record in June, Kpler data showed.

Kuwaiti crude exports have recovered to about 1m bpd in July and August.

However, Iran’s oil exports have fallen sharply due to the US blockade.

Other producers are stepping up

Non-Opec producers, including the US, Canada and Guyana, are set to increase output by a combined 1.4m bpd this year, according to Jarand Rystad, founder of Rystad Energy, partly filling the shortfall.

Meanwhile, Russian crude exports held steady at about 5.5m bpd in July and August, down from the 6.4m bpd peak in June, but still 23 per cent higher than February as processing at Russian refineries has fallen due to damage to Russian plants from Ukrainian attacks, Kpler data showed.

However, Russia has downgraded its 2026 oil output forecast to a 17-year low, which may reduce its exports.

Demand destruction is significant

Demand destruction in petrochemicals and transportation fuels remains significant in the third quarter at 3.5m bpd, versus 4.5m bpd in the second quarter, with China accounting for more than half of that due to rising transport electrification and coal-based chemicals, Rystad said.

Top importer China, dubbed the “new demand Opec” for its market influence, slashed seaborne crude shipments to 7m bpd in July and August, from over 11m bpd in February.

Beijing’s vast reserves, estimated by Kpler at 1.17 billion barrels, have also given markets comfort.

Physical markets tell a different story

Spot premiums have rebounded to April levels with Dubai and Oman at $19 to $20 a barrel above Dubai quotes for cargoes loading in November, Reuters data showed. Oman futures were at $104.54 a barrel on Monday while cash Dubai traded at $105.10 a barrel.

“At the moment, it’s telling us that physically things are incredibly tight,” said David Fyfe, chief economist at Argus.

“We’ve already got prices substantially above $100 a barrel and even more important, you’ve got a diesel market that is screaming shortage.”

The recent US-Iran escalation is expected to curb Gulf exports while demand rises as refiners ramp output of diesel, which has hit a record high price in the US.

Analysts lift forecast

Several banks have raised their Brent price forecasts, including Morgan Stanley which expects prices averaging $100 a barrel in the fourth quarter.

Goldman Sachs raised its Brent and West Texas Intermediate forecasts by $5 a barrel for December 2026 and 2027, citing an expectation that Middle East shipping disruptions will persist into next year. It now forecasts Brent at $85 a barrel and WTI at $80 for December 2026, and 2027 prices at $80 and $75 a barrel, respectively.