Oil flows are up as Iran war turmoil eases. Why do prices keep rising?

What Happened

Oil exports from the Gulf averaged 24.6 million barrels per day (bpd) in the week to October 18, exceeding the pre-war average, according to Kpler. But Brent crude front-month futures rose more than 2 percent on Friday to briefly top $117 a barrel, up more than 60 percent compared with before the war. Market analysts attributed the price rise to anxiety about renewed hostilities in the US/Israel war on Iran, dwindling oil stocks, and increased transport costs. Freight costs reached as much as $40 per barrel in recent weeks, about 10 times the usual rate, according to London Stock Exchange Group data, while the United Kingdom Maritime Trade Operations (UKMTO) logged 32 attacks on commercial vessels in October as of Friday, the deadliest month since the war's start. Workarounds include ship-to-ship transfers off Oman and the UAE, which handled more than 70 percent of crude crossing the Strait of Hormuz in August, and pipeline bypasses; 40 percent of Gulf exports bypassed the strait in September, up from 17 percent before the war, according to Kpler. The IEA reported OPEC Gulf production at 15.8 million bpd in September, 75 percent of the pre-war baseline, and observed inventories fell by 10 million barrels in September to 509 million barrels below pre-war levels.

Key Actors

Why It Matters

The Strait of Hormuz is a chokepoint for one-fifth of global oil and liquefied natural gas supplies during peacetime, so any sustained disruption imposes a structural premium on energy prices. The article shows that even with physical barrels moving, the market is pricing in persistent war risk, depleted inventories, and elevated shipping costs, with long-dated Brent futures for October 2027 above $90 per barrel. This signals that traders expect no near-term return to normal transit and supply conditions, with direct implications for global inflation and energy security.

Watch For

Monitor the next IEA monthly oil market report and OPEC production data for October to see whether OPEC Gulf output moves beyond September's 15.8 million bpd (75 percent of pre-war baseline) or stalls. Track UKMTO daily incident reports for attacks on commercial vessels in the Gulf and Strait of Hormuz, as any increase beyond October's 32 logged incidents could drive further freight and insurance cost spikes. Watch for any durable de-escalation or diplomatic solution to the US/Israel war on Iran, including demining of Hormuz, return of shipping crews, and resumption of shut-in oilfields, which analysts cited as prerequisites for supply to exceed 85 percent of pre-war levels and for prices to fall back toward $70 per barrel.