The sharp decline in oil prices and the interim US-Iran deal has raised investor hopes of supplies recovering to pre-war levels soon. In fact oil exports from the Persian Gulf have recovered sharply, reaching nearly 80% of pre-conflict levels. Goldman Sachs expects the oil flows could return to pre-war levels of about 23 mb/d by early July if exports continue recovering at the recent pace.
Goldman Sachs noted that Persian Gulf oil flows have risen to around 18 million barrels per day (mb/d) on a seven-day moving average basis. Flows increased by about 7 mb/d during the first 10 days after the interim agreement.
Tanker activity has picked up over the past two weeks. Around 178 tankers have exited the Persian Gulf, mainly carrying oil from the UAE, Saudi Arabia and Iran, while 132 tankers have entered the Gulf to load crude oil and refined petroleum products.
Fresh tanker attack highlights risks
However, risks are not entirely behind, as the recovery remains vulnerable to continuing security threats for vessels operating in the region. A tanker attack occurred on June 27, the first reported attack since June 13.
Following the incident, several supertankers reportedly turned back before crossing the Strait of Hormuz. As a result, estimated oil exports through the waterway dropped below 5 mb/d over the weekend (June 27-28), or less than 20% of normal volumes.
Iran’s stance key to Strait of Hormuz oil exports
Goldman Sachs noted that the main challenge to restoring normal export levels is “Iran’s willingness, rather than lack of transport capacity, as the main constraint for a swift flows recovery.”
The bank estimates that tankers near the Strait currently have the capacity to transport around 930 million barrels of oil, with empty tanker capacity inside the Gulf exceeding loaded volumes.
Gulf producers reduce reliance on Strait of Hormuz
Despite the improvement, Gulf producers continue to invest in infrastructure to reduce their dependence on the Strait of Hormuz.
The report said the UAE is building a new pipeline that will increase crude export capacity through the port of Fujairah by 1.5 mb/d by 2027. Iraq has also started work on the Basra-Haditha pipeline, which will provide greater access to export markets through the Mediterranean.
Oil inventories continue to decline
Despite the recovery in Gulf exports, global visible oil inventories continue to decline. Goldman Sachs expects global oil stocks to continue declining through July. It expects the market to return to a modest surplus only in August once exports fully recover.
Goldman Sachs estimated that visible oil stocks have been falling at an average pace of 2.3 mb/d in June. It said stronger refinery activity worldwide and the time taken for Gulf exports to reach importing countries have prevented inventories from rebuilding.
Disclaimer: The global commodity projections and market analysis detailed above are based on institutional reports and evolving international developments. This content is intended solely for informational purposes and does not constitute financial advice, market forecasting, or specific investment recommendations. Readers are advised to consult certified professionals before making any financial or trading decisions based on macroeconomic trends.
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