Middle East Crude Exports Recover to Prewar Levels But Oil Markets Stay Unsettled

Middle East crude oil exports have returned to prewar levels, according to analysts, as the region's major producers ramped up supplies through alternative pipelines, ports, and ship-to-ship transfers to route around disruptions caused by the Iran conflict. Goldman Sachs confirmed that Gulf oil exports have recovered to 2025 baseline levels, a development that pushed WTI down roughly 1.8% and Brent down about 1.4% in early trading.

Despite the supply recovery, oil prices have not collapsed. Stalled U.S.-Iran talks are providing a floor, as market participants price in the possibility that the diplomatic standoff could disrupt flows again. CNBC analyst Kilduff noted it was surprising prices had not held higher even with improving flows, a sentiment echoed by the question circulating on trading desks: why are oil futures still elevated if Middle East exports have fully recovered.

Goldman's One-Delta desk flagged a more structural concern, warning that the traditional correlation between energy prices and interest rates is breaking down. The desk cautioned that if oil is not the instrument that resolves the current macro tension, the rates picture becomes more complicated. The 10-year Treasury yield was trading below 5% on the day.

On the demand side, Chinese seaborne crude imports posted a third consecutive monthly rise in September, reaching approximately 7.50 million barrels per day, while onshore inventories drew sharply, falling 53 million barrels over the month to around 1,124 million barrels. However, Chinese refineries are running at only 75% capacity, raising the question of whether Beijing will allow higher throughput to support a diesel market under pressure. U.S. retail diesel prices fell 11 cents in the past week according to AAA data, and gas price declines are already pressuring producers such as Northern Oil and Gas.