JPMorgan: Middle East Oil Exports Recover to 89% of Pre-War Levels, Crude Market Largely Normalized
nashnova research
Middle East oil exports have rebounded to 20.5 million barrels per day on a 10-day average — 89% of pre-war levels — leading JPMorgan to declare crude markets largely normalized, even as refined-product shortfalls still exceed 40%.
Crude is back to 98% — so why isn't the market fully reassured?
Crude flows have rebounded to 17.5 million bpd, roughly 98% of the pre-war ~18 million bpd — upstream production and transport are essentially back to normal.
Refined-product exports, however, sit at just 3 million bpd versus ~5.2 million bpd pre-war — a recovery rate of only 58%, with a gap exceeding 40%.
This means → the oil fields are pumping, but refineries haven't kept up. Diesel, jet fuel, and gasoline supplies will stay tight in the near term.
In plain terms = the raw material is flowing again, but the "processing plants" are still damaged — end users feel the shortage most acutely at the refined-product stage.
India's imports surged by 1.2 million bpd — what does that signal?
In September, India's crude imports from the Middle East and "unidentified sources" rose to 2.8 million bpd, up 1.2 million bpd from August — exceeding the 2025 full-year average.
This means → as Middle East export channels reopen, buyers are actively restocking and resuming normal procurement cycles.
This reflects a broader revival of regional crude trade flows — downstream demand data independently validates JPMorgan's "largely normalized" call.
Strait of Hormuz traffic is rising — does that mean it's safer?
Hormuz transit volumes have approached the late-June recent high of roughly 13 million bpd, with Saudi Arabia as the primary contributor.
JPMorgan is explicit: higher transit volumes do not mean improved security — they reflect the industry's growing ability to operate under persistent risk.
In plain terms = more ships are passing through not because it's safer, but because the money is good enough — the risk hasn't changed, but high freight rates are pulling capacity in.
Freight rates are near record highs — what is the market pricing?
VLCC (very large crude carrier — giant tankers holding ~2 million barrels) charter rates linked to Hormuz have neared a historic high of $1.27 million per day.
Elevated freight is drawing marginal capacity into the market — shipowners are effectively pricing in security risk.
This means → this "spot premium" has distorted the second-hand vessel market: VLCCs aged 5–10 years are now valued above $150 million, exceeding newbuild prices of roughly $135 million.
In plain terms = an old ship costs more than a new one — because the old ship can earn today, while a newbuild takes years to deliver. The market is paying for the ability to make money right now.
Who is keeping the Strait of Hormuz running?
Regional producers' captive fleets are the critical backstop: Saudi Arabia's Bahri, Abu Dhabi's ADNOC L&S, Kuwait's KOTC, and Oman's Asyad — all maintaining normal liftings as the spot market tightens.
A similar "shuttle" pattern has spread to container shipping: most Hormuz container freight is now carried by feeder vessels linked to Abu Dhabi Ports Group, while major global container lines largely remain on the sidelines.
This reflects a structural reality — state-owned regional capacity is filling the gap left by global commercial operators, but how long this self-reliant model can hold depends on when the risk environment improves.
What's the key indicator for judging whether Middle East supply has truly fully normalized?
JPMorgan identifies a clear benchmark: whether the refined-product gap narrows is the critical verification point.
Crude at 98% recovery is only the first half — the pace at which refining capacity and export infrastructure are restored determines the second half.
In plain terms = today's "normalization" is at the raw-material level; the end-product level is still far behind. Only when refined-product exports start climbing from 58% can we call it a genuine, full recovery.
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