Oil prices continued to decline today after yesterday's sharpest drop in a week, amid signs that Middle East supplies have nearly returned to pre-war levels as Saudi Arabia resumed throughput on a pipeline that bypasses the Strait of Hormuz.
The most actively traded Brent contract now trades near $96/barrel after a 1.7% decline in the previous session, while WTI has dropped below $89. Ten-day average exports from the Middle East have recovered to about 17.5 million barrels per day, or roughly 98% of the pre-war level.
As noted above, Saudi Arabia restored flows on the East-West pipeline to at least 3.5 million barrels per day — roughly half its capacity. In addition, despite ongoing risks to shipping, a steady flow of oil continues to transit the Strait of Hormuz via ships operating covertly, which helps dispel fears that a deal to reopen the waterway has not been reached.
Oil prices also fell on prospects that the U.S. may impose limits on diesel exports as the Trump administration seeks to contain record domestic fuel prices. Many analysts, however, believe Washington will refrain from an outright ban that would further curtail global fuel supplies. Still, geopolitical instability, the risk of renewed disruptions around the strait ahead of the U.S. midterms, and limited logistics will keep prices elevated.
Goldman Sachs reports that Gulf exports, including so-called shadow shipments moved covertly, rose last week to about 23.3 million barrels per day — equivalent to the 2025 average.
Yesterday the industry-funded American Petroleum Institute (API) reported a 1 million-barrel build in U.S. crude inventories last week, adding pressure to prices. Official inventory data will be published today.
Technical picture: buyers need to take the nearest resistance at $92 to target $96, beyond which a breakout will be difficult. The farther target is $100. On a decline, bears will try to seize control of $89; if they do, a range break would seriously damage bullish positions and push Oil down to $87, with the prospect of reaching $83.