Oil prices have struggled to sustain declines below $100 a barrel, despite indications that crude shipments through the Strait of Hormuz have recovered towards pre-war levels, as elevated freight costs, war-risk premiums, supply constraints and depleted inventories continue to support prices.
Brent crude has remained around or above the $100 mark for much of the past month, significantly above the roughly $60 a barrel level recorded before the war.
The persistence of high prices reflects the cost and reliability of moving crude to refiners rather than simply the volume of oil being loaded in the Middle East.
Tanker freight rates have risen to record levels, while war-risk insurance premiums have increased as vessels continue to face security threats around the Strait of Hormuz.
Gulf producers have also resorted to alternative transportation routes to maintain exports. While these workarounds have helped restore some flows, they are less efficient, more expensive and can add weeks to delivery times.
“The market is pricing not only how much crude is being loaded, but also whether these barrels can be delivered safely, reliably, and at low cost,” Xuyi Zhao, senior oil analyst at Guotai Junan Futures, told Bloomberg.
The pressure is particularly evident in the refined-products market, where refiners are maintaining high processing rates to benefit from strong margins and meet demand for diesel, currently one of the most constrained products in the market.
Diesel supplies face additional pressure from limited exports. Middle Eastern fuel shipments remain restricted, while Russia has halted diesel exports and China has tightened overseas fuel shipments to protect domestic supply.
At the same time, global oil and fuel inventories have fallen sharply this year. Stocks were drawn down during the peak disruption to Strait of Hormuz flows in April and May, leaving the market with a smaller buffer against another supply shock.
That reduced cushion has become increasingly important as the northern hemisphere approaches the winter period, when diesel demand typically rises.
The combination of tight inventories, constrained refined-product exports and elevated transportation costs means that an improvement in crude flows through the Strait of Hormuz has not translated into a full normalisation of the global oil market.
Geopolitical risks are also keeping upward pressure on prices.
The market remains concerned that the conflict could escalate again, potentially disrupting the recovery in Middle Eastern crude flows. The risk is particularly significant because available spare inventories are considered insufficient to absorb another major interruption for an extended period.
SEB chief commodities analyst Bjarne Schieldrop identified several uncertainties facing the market, including the possibility of renewed Iranian attacks before the U.S. midterm elections, potential U.S. military action against Iran afterwards and the ability to maintain the Strait of Hormuz in operation.
He also raised concerns over possible attacks by the Houthis on Saudi Arabia's East-West oil pipeline and vessels using the Bab el-Mandeb Strait.
The risks extend beyond the Strait of Hormuz itself. Any disruption to an alternative supply route could quickly tighten the market because inventories have already been depleted.
The G7's announcement of plans to release 100 million barrels of crude oil and diesel stocks initially pushed prices lower, but the effect has since weakened.
Market participants remain uncertain about how much of the announced volume represents genuinely additional supply and how much could consist of stocks previously committed under an earlier International Energy Agency release plan.
The physical market is also showing signs of tighter pricing than headline Brent futures suggest. Schieldrop noted that while front-month Brent was trading around $100 a barrel, North Sea Oseberg and Forties crude were trading at approximately $140 a barrel.
The divergence highlights the premium being attached to readily available physical barrels amid logistical and geopolitical constraints.
Saxo Bank's Head of Commodity Strategy, Ole Hansen, said a sustained decline in Brent would require a broader normalisation of the market, including improving crude supply, recovering refined-product exports and lower political and financial risks associated with shipping.
The current market therefore remains vulnerable to another price increase if a major supply route is disrupted.
Saudi Aramco Chief Executive Amin Nasser has warned that the global supply resilience cushion is now extremely thin.
“With precious little else the world can turn to, the supply resilience cushion is scarily thin,” Nasser said at the 2026 Energy Intelligence Forum in London.
He added that emergency reserves could provide short-term support through the winter but would not resolve longer-term supply constraints.
The continued strength of Brent above $100 therefore reflects more than the volume of crude currently leaving the Middle East. High freight and insurance costs, constrained fuel exports, depleted inventories and persistent geopolitical risks continue to make the physical delivery of oil more expensive and less secure.
As a result, any fresh disruption to Middle Eastern supply could trigger another sharp price increase, particularly while the global market has limited inventory available to absorb the shock.