Brent crude rose above the $90 a barrel mark on Friday as concerns over the prolonged Middle East conflict continued to support prices, even as a recovery in regional oil exports provided a potential ceiling to further gains.
As of 12:05 p.m. WAT, Brent crude was trading at $90.15 a barrel, up 0.50%, while West Texas Intermediate (WTI) stood at $83.56, gaining 0.04%.
The price movement comes against a backdrop of improving oil flows from the Persian Gulf, with Goldman Sachs estimating that volumes leaving the region have recovered to roughly two-thirds of their pre-war levels.
The investment bank said between 15 million and 16 million barrels per day (bpd) of crude and petroleum products are now leaving the wider Middle East. That represents an increase of about 5 million to 6 million bpd from the March low.
Despite the recovery, regional exports remain significantly below their pre-war position. Goldman estimated that total Middle Eastern flows are still 7 million to 8 million bpd below February levels.
The increase in supply could limit the extent of any further oil price surge if the conflict continues, particularly as producers and shipping operators find ways to move cargoes despite restrictions around key waterways.
Goldman estimated that oil volumes exiting the Middle East through the Strait of Hormuz alone could be approaching 8 million to 10 million bpd, broadly in line with US estimates.
A key factor behind the recovery has been the increased use of less visible shipping operations. Goldman said the rise in vessels making dark crossings, alongside greater use of ship-to-ship transfers, indicates that producers and shipping companies are adapting their operations to the conflict.
These arrangements have allowed additional crude volumes to reach international markets despite the disruption around the strategic waterway. Goldman said such movements could moderate upward pressure on crude prices even if the regional disruptions persist for an extended period.
Oil flows through Hormuz have also increased substantially from levels recorded in July. Bloomberg trading sources estimated that volumes had reached around 7 million to 8 million bpd, compared with approximately 4 million bpd in mid-July.
Qatar and Kuwait have also increased their exports through the strait to around 70% of their pre-war levels, according to earlier estimates from traders cited by Bloomberg. The two Gulf producers have followed the United Arab Emirates in using shuttle operations and ship-to-ship transfers in the Gulf of Oman to maintain exports.
The combination of these measures has enabled Gulf producers to sustain a degree of international supply despite the disruption affecting the region's conventional shipping routes.
For the oil market, the developments create a mixed picture. Geopolitical uncertainty and the possibility of prolonged disruption continue to support crude prices, while the gradual restoration of physical oil flows reduces the likelihood of an extended supply shock of the magnitude initially feared.
With Brent now back above $90 a barrel, the balance between geopolitical risk and the ability of Middle Eastern producers to maintain exports will remain central to the direction of prices.