Oil’s War Premium Starts to Fade as Gulf Exports Return

Oil prices are coming under renewed pressure as supply disruptions in the Gulf begin to ease.

Goldman Sachs estimates that Gulf oil exports have recovered to around two-thirds of their pre-war level, suggesting that a large part of the initial supply shock is already being reversed.

That could take some of the geopolitical premium out of crude. WTI and Brent had surged as the conflict disrupted shipments through the Strait of Hormuz, with traders pricing in the risk of a prolonged supply squeeze.

With more barrels returning to the market, attention is shifting back to supply, inventories and global demand. If exports continue to recover, crude could have less room to hold onto the gains driven by geopolitical risk.

WTI has already shown how quickly sentiment can change. After briefly trading above $80, the contract came under heavy selling as hopes of easing tensions around the Strait grew.

A faster recovery in Gulf supply would keep pressure on crude and put $80 and below back in focus for WTI. Any fresh disruption, however, could quickly bring the risk premium back.

For the oil market, the focus is gradually shifting from how much supply could be lost to how quickly those barrels are coming back.