Key Moments
- Crude exports from Kuwait and Qatar have recovered to about 70% of pre-war levels, boosting overall flows through the Strait of Hormuz.
- Brent crude is trading near $87/bbl, down sharply from a peak above $120 in late April as supply concerns ease.
- Total oil movements through the Strait of Hormuz have increased to roughly 7mn to 8mn barrels per day from about 4mn in mid-July, compressing the disruption premium despite ongoing U.S.-Iran tensions.
BNY Flags Retreat in Oil Risk Premium
Geoff Yu at BNY highlights that the improvement in crude flows via the Strait of Hormuz is alleviating earlier supply concerns and contributing to a softer Brent price profile. As shipments from key Gulf producers increase, investors have been dialing back the risk premium built into oil prices.
Kuwait and Qatar have restored crude exports to about 70% of pre-war volumes, according to Yu, helping lift the total amount of oil transiting the strategic chokepoint. This rebuilding of physical supply has provided more comfort to markets that had been bracing for extended disruption.
Impact on Brent and the Inflation Outlook
“Improving Hormuz flows are providing further reassurance on inflation. Kuwaiti and Qatari crude shipments have reportedly recovered to around 70% of pre-conflict levels, while broader traffic through the strait is also rising. Brent is falling again as supply fears ease, removing some of the energy-driven pressure on the global disinflation outlook.”
Brent crude has retreated significantly from its late-April high as supply visibility has improved. The price is holding near $87/bbl, “well below its late-April peak above $120, as rising oil flows through the Strait of Hormuz ease fears of a prolonged supply shock.” Yu notes that the normalization of flows has reduced the degree to which energy prices threaten the broader disinflation trend.
Hormuz Throughput and Supply Premium Compression
Flows through the Strait of Hormuz have rebounded sharply from mid-July levels. “Kuwait and Qatar have restored shipments to around 70% of pre-war levels, while total flows through the strait have climbed to roughly 7mn to 8mn barrels a day from about 4mn in mid-July.”
| Metric | Level / Change |
|---|---|
| Kuwait & Qatar crude shipments | About 70% of pre-war levels |
| Total Hormuz flows (mid-July) | About 4mn barrels per day |
| Total Hormuz flows (recent) | Roughly 7mn to 8mn barrels per day |
| Brent crude price | Near $87/bbl, below late-April peak above $120 |
This rebound in throughput has steadily reduced the supply disruption premium embedded in oil prices. “With more Gulf barrels reaching the market, the supply disruption premium in oil has continued to compress, even though Washington and Tehran remain deadlocked over control of the strait.”
The persistence of U.S.-Iran tensions has not prevented the narrowing of the risk premium as physical supply conditions improve, underscoring the market’s focus on realized flows through the Strait of Hormuz.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
