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Key Moments

  • ICE Brent settled a little over 1% lower as market optimism grew over improving Persian Gulf oil flows through the Strait of Hormuz.
  • Recent oil shipments through the strait were estimated at 6-7m b/d, still well below pre-war levels of around 20m b/d and below the 14m b/d seen as sufficient for a full Persian Gulf supply recovery.
  • US API data showed a 800k-barrel weekly draw in crude inventories and a 1m-barrel decline at Cushing, while Russia’s refined product export restrictions and potential diesel export ban continued to support middle distillates.

Brent Slips Despite Tightening Fundamentals

ING analysts Warren Patterson and Ewa Manthey reported that crude benchmarks have been under pressure, with ICE Brent settling a little more than 1% lower as the latest session closed. They highlighted that prices have been “grinding lower” even as indicators still point to a tightening global oil balance.

According to the analysts, the recent sell-off appears excessive relative to the underlying supply-demand backdrop. They noted that price action suggests traders are increasingly positioned for a relatively swift restoration of crude flows from the Persian Gulf.

Strait of Hormuz Flows Recover, But Still Below Pre-War Levels

The analysts pointed to improving traffic through the Strait of Hormuz as a key factor behind the softer Brent prices. They observed that vessel crossings have risen in recent days, helping to lift sentiment around export prospects from the Persian Gulf.

However, they stressed that current flows remain significantly below pre-war norms. They cited estimates indicating that around 6-7m b/d of oil has moved through the strait in recent days, compared with pre-war flows of roughly 20m b/d.

They also noted that pipeline alternatives in the region play an important role in bridging the gap. As they explained, with pipeline diversions available to Saudi Arabia and the UAE, the market would not need to see a full return to 20m b/d through the strait. Instead, flows of about 14m b/d would be sufficient to restore overall Persian Gulf supply to pre-war levels.

Flow MetricEstimated Volume (m b/d)
Recent Strait of Hormuz flows6-7
Pre-war Strait of Hormuz flows20
Flows needed (with pipeline diversions) to match pre-war Gulf supply14

US Inventory Data Show Modest Crude Draws

On the US side, the latest weekly figures from the American Petroleum Institute (API) indicated a relatively small decline in nationwide crude stocks. The analysts said the data showed that “US crude oil inventories fell by just 800k barrels over the last week.”

They added that inventories at the WTI delivery hub in Cushing saw a larger drop, with crude stocks there down by 1m barrels over the same period. While product data were not detailed, they characterized the US numbers overall as pointing to modest crude draws alongside product builds.

LocationInventory Change
US total crude (API)-800k barrels
Cushing (WTI delivery hub)-1m barrels

Russian Product Export Risks Support Middle Distillates

Beyond crude, Patterson and Manthey flagged growing concerns over refined product supply from Russia, driven by continued Ukrainian attacks on Russian energy infrastructure. They noted that Russia has already implemented restrictions on exports of gasoline and jet fuel.

The analysts also referred to indications that Moscow could tighten product flows further. They wrote that “there are reports that the government is considering a ban on diesel exports,” a development that would add support to middle distillate markets.

According to the authors, these refined product constraints, combined with still-constrained Persian Gulf crude flows and relatively modest US stock draws, underpin their view that the recent weakness in oil prices does not fully reflect the tightening market conditions.

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