Middle Eastern oil exports have recovered to 89% of pre-war levels! JPMorgan Chase judges: The crude oil market has largely normalized.

Middle Eastern oil exports have recovered to 89% of pre-war levels! JPMorgan Chase judges: The crude oil market has largely normalized.

With the resumption of operations of Saudi Arabia's East-West pipeline, the artery for Middle Eastern oil exports has been reopened, and the crude oil market is undergoing a significant supply recovery.

According to a recent research report released by JPMorgan Chase on September 29, the 10-day average of Middle Eastern oil exports has rebounded to 20.5 million barrels per day, equivalent to 89% of pre-war levels in 2025, only 11% lower than pre-war levels. JPMorgan Chase's commodities research team believes the crude oil market has essentially normalized. This means that despite ongoing regional conflicts, the substantial recovery on the supply side has been confirmed by data.

However, the recovery has been uneven. Crude oil flows have rebounded to 17.5 million barrels per day, recovering to 98% of pre-war levels, while refined product exports are only 3 million barrels per day, equivalent to only 58% of pre-war levels. This means that while the crude oil market has largely normalized, the supply gap for refined products remains significant, and related markets still face structural pressures.

Crude oil and refined oil products: Recovery shows significant divergence

The report data shows that the current rebound in Middle Eastern oil exports exhibits a clear pattern of internal differentiation.

Regarding crude oil, the daily flow of 17.5 million barrels is close to the pre-war normal level (approximately 18 million barrels), with a recovery rate as high as 98%, indicating that upstream production and crude oil transportation have basically returned to normal operation.

The situation is quite different for refined petroleum products. Currently, daily exports are only 3 million barrels, representing just 58% of pre-war levels (approximately 5.2 million barrels), a shortfall of over 40%. This means that refining capacity and export infrastructure in the Middle East remain significantly constrained, and the tight supply of refined products such as diesel, aviation fuel, and gasoline is unlikely to be completely eliminated in the short term.

For the energy market, this divergence means that the crack spread between crude oil and refined oil products may continue to be under pressure, and the trend of refinery profit margins deserves continued attention.

Indian import data confirms demand recovery

The recovery in Middle Eastern oil exports has been validated by downstream demand, with the most direct signal coming from India—the Middle East's largest neighboring buyer of oil.

According to JPMorgan Chase data, India's crude oil imports from the Middle East and "unknown sources" rose to 2.8 million barrels per day in September, a significant increase of 1.2 million barrels per day from August, and have already exceeded the average level for the whole of 2025.

This data indicates that as Middle Eastern export routes gradually reopen, buyers are actively replenishing their inventories or resuming normal purchasing patterns. The rapid rebound in Indian imports reflects both a substantial improvement in the Middle Eastern supply side and a sign of renewed activity in regional crude oil trade flows.

Strait of Hormuz: Risk Pricing Under High Freight Rates

Traffic through the Strait of Hormuz has approached its recent high from late June, at approximately 13 million barrels per day, with Saudi Arabia being the primary contributor. However, JPMorgan Chase cautions that the increase in transit volume does not necessarily indicate an improved security situation, but rather reflects the industry's enhanced operational capabilities in a persistently risky environment.

The performance of the freight market confirms this assessment. Daily charter rates for Very Large Crude Carriers (VLCCs) linked to the Hormuz have reached near-record highs of $1.27 million per day. These high freight rates are attracting marginal capacity into the market, and shipowners are effectively pricing in safety risks and profiting from them.

This "instant premium" has distorted the valuation logic of the secondhand ship market—VLCCs aged 5 to 10 years are valued at over $150 million, higher than the newbuilding price of approximately $135 million. Meanwhile, regional producers' own shipping capacity—including Saudi Arabia's Bahri fleet, ADNOC L&S (owned by Abu Dhabi National Oil Company), Kuwait's KOTC, and Oman's Asyad—has provided crucial support for maintaining normal delivery operations amid a tightening spot market.

The "shuttle" model extends to container shipping.

JPMorgan Chase points out that this "shuttle" model, which maintains operations in a high-risk environment, is no longer limited to oil transportation and is spreading to the container shipping sector.

Currently, most container freight in the Strait of Hormuz is handled by feeder vessels affiliated with Abu Dhabi Ports, while major global container shipping companies remain largely on the sidelines. This situation indicates that, against the backdrop of lingering geopolitical risks, regional port operators are filling the gaps left by large international shipping companies and accumulating market share in the process.

For participants in the commodities market, the above developments mean that the logistical bottlenecks in Middle Eastern oil supply are gradually being eased. However, high transportation costs and persistent security risks will remain important variables affecting crude oil landed prices and trade flows.

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