While Brent oil futures contracts decreased by 4 cents to $100.28 per barrel, the barrel price of US West Texas Intermediate crude oil (WTI) decreased by 0.1 percent to $89.33.
While there is still concern in the oil market that the conflicts in the Middle East may cause a supply interruption, on the other hand, the Gulf countries' continuation of oil shipments through alternative routes and the G7's decision to release 100 million barrels of oil and diesel from strategic reserves put downward pressure on prices.
KCM Trade Chief Analyst Tim Waterer stated that oil prices remained largely horizontal after the previous day's decline and that investors evaluated the limited relief in supply-side concerns.
OIL FLOW IN THE GULF APPROACHED PRE-WAR LEVELS
According to Standard Chartered's evaluations, crude oil and condensate exports from the Gulf region, excluding Iran, reached approximately 16.5 million barrels per day in September. This figure marked a substantial return to pre-war levels.
But the way oil is transported has changed dramatically. While 83 percent of Gulf exports passed through the Strait of Hormuz before the war, this rate decreased to 60 percent in September.
While it is stated that exporters deliver oil to the market through alternative pipelines, ports and different sea routes, it is stated that ship-to-ship (STS) transfers are also used more intensively.
Standard Chartered states that the recovery in oil flows indicates the resilience of the system rather than normalization. Although oil shipments continue, longer journey times, higher freight and security costs and lower logistics efficiency occur.
SAUDI ARABIA'S EXPORTS RECOVERED QUICKLY
Saudi Arabia has become one of the leading countries in reshaping the oil flow in the region.
While it was stated that exports shifted to the east coast after the damage that occurred in the East-West pipeline at the beginning of September, Saudi Arabia's total oil exports increased from 2.45 million barrels per day in August to approximately 6.9 million barrels in September, according to Standard Chartered.
The recommissioning of the East-West pipeline and the start of loading from Yanbu has reintroduced an alternative route through which the country can deliver its oil to the market. However, it is stated that the pipeline is still operating below its nominal capacity and is open to new attacks.
The cost of alternative shipping methods is also rising. There are reports that discounts of up to 9 dollars per barrel have been made in oil cargoes loaded off the coast of Oman in order to cover the increasing logistics costs.
KCM Trade Chief Analyst Tim Waterer also stated that the increase in Saudi Arabia's oil exports increased the pressure on prices.
EXPECTATION OF 70 DOLLAR BASE IN OIL
ConocoPhillips Chairman Ryan Lance made a remarkable assessment about the medium-term outlook of oil prices.
Lance said he expects the oil price floor to rise to around $70 per barrel, while the mid-cycle price for US West Texas Intermediate (WTI) will be in the range of $65-$70.
Speaking at the Energy Intelligence Forum held in London, Lance stated that the global oil system was challenged due to this year's Middle East conflict, but the system remained afloat.
Lance stated that it may take until 2028 or 2029 for global oil demand to recover from the current crisis, but there is no obstacle to demand continuing to increase afterwards.
Stating that ConocoPhillips is currently focusing on production activities rather than midstream oil investments, Lance said, "The real strategic question for companies like mine is where is the conventional (production) going to come from to satisfy that growing demand."
100 MILLION BARREL RESERVE MOVE FROM G7
One of the developments that alleviated concerns about oil supply was the decision of G7 countries to use their strategic reserves.
G7 decided to release 100 million barrels of diesel and crude oil from emergency reserves. Countries also vowed not to impose restrictions on energy exports after pressure from US President Donald Trump.
This move is expected to alleviate supply concerns in the market in the short term and limit the rise in oil prices.
However, while the recovery in physical oil flows reduces the likelihood of the harshest supply deficit scenarios in the market, a full return to pre-war risk levels has not been achieved due to the transportation of oil at higher costs.
IRAN'S EXPORTS HAVE BEEN ALMOST ZERO
Developments in the region have also changed the balances among oil exporters. It is stated that Iran's crude oil exports by sea decreased to almost zero in September. Before the war, Iran's seaborne oil exports were approximately 1.7 million barrels per day.
The US naval blockade has severely restricted Tehran's ability to transport oil through Hormuz, reducing Iran's influence on oil flows.
Iran, on the other hand, maintains its stance that the Strait of Hormuz will remain closed. Foreign Minister Abbas Arakchi said that the strait will not be reopened until the United States fulfills the seven conditions in the interim agreement reached in June.
Arakchi also stated that if Tehran's latest offer is accepted by Washington, the Strait of Hormuz can be reopened within seven days.
THE HOUTI'S STATEMENT OF THE ATTACK KEEP THE SUPPLY RISK ON THE AGENDA
The continuation of conflicts between Saudi Arabia and the Iranian-backed Houthis in Yemen also keeps the risks regarding oil supply alive.
The Houthis announced that they carried out attacks on several points in Saudi Arabia on Monday, including King Khalid International Airport, the Aramco refinery in Rabigh and Abha Airport.
No official confirmation has yet been made by Saudi Arabia regarding the attacks in question.
There has been no progress yet in the talks between the USA and Iran. Markets are closely monitoring the impact of conflicts in the Middle East, especially the developments in the Strait of Hormuz, on oil supply.
The current picture shows that two different trends stand out in the oil market: While exporters' continued flow of oil through alternative means limits the supply premium in prices, high logistics costs and the risk of new attacks prevent oil prices from fully returning to pre-war risk premiums.
