The Commodities Feed: Sustained Middle East flows fail to dent oil prices
The desk posits that oil prices remain resilient amid geopolitical risks in the Middle East, with ICE Brent prices holding around $110 per barrel, demonstrating a significant risk premium. As noted in the full note from ing-think, the market is currently pricing in potential disruptions despite steady flows from the Persian Gulf. A crucial element to monitor is the high tanker freight rates attributed to supply chain disruptions in the region, which could influence overall oil supply dynamics in the near term.
What the desk is arguing
The desk asserts that despite a steady flow of oil from the Middle East, heightened geopolitical tensions are keeping oil prices buoyant. Per the full note from ing-think, ICE Brent prices have stabilized around $110 per barrel, indicating a market adjusting for risk premiums tied to supply uncertainties.
Notably, the article highlights that logistics challenges, particularly elevated tanker freight rates, are exacerbating supply concerns. The U.S. is contemplating measures to sell sanctioned tankers to alleviate capacity issues, but the potential impact on rates and delivery costs remains uncertain and may take time to materialize.
Where it sits in our coverage
Currently, we do not hold any specific consensus targets related to currency pairs for this situation, but traders should remain vigilant regarding market reactions to oil price movements in the forex arena.
How other firms see it
Inside the broader landscape, firms generally maintain a cautious outlook on oil prices, aligning with the desk's perspective on elevated premiums. Contrarily, some firms argue that the persistent flow of oil from the Persian Gulf could eventually stabilize prices.
Looking at related sectors, oil price trajectories will influence currency pairs such as USD/CAD and NOK/USD, given their ties to energy pricing and economic performance. Watch these pairs closely as market sentiments evolve.
What the calendar says
No significant market-moving events are imminent, allowing traders to focus on oil price movements and geopolitical developments for the foreseeable future.
Key takeaways
- 01Oil prices remain around $110/bbl, mainly due to geopolitical tensions in the Middle East.
- 02Sustained flows from the Persian Gulf are unable to significantly dampen prices, which indicates a strong risk premium.
- 03Logistical challenges with tanker freight rates are contributing to supply chain inefficiencies.
- 04The U.S. is considering measures to increase tanker availability, potentially affecting future oil supply costs.
Market implications
Traders should monitor Brent crude prices for potential breakout levels, particularly around $110, as any shifts could spur volatility in related currency pairs. Keeping an eye on U.S. policy actions regarding tanker sanctions might also provide insights into future capacity and freight rates.
Risks to this view
A significant de-escalation of geopolitical tensions in the Middle East could lead to a rapid decline in oil prices, thus negating the current risk premium. Additionally, if logistical enhancements effectively lower freight rates, this could similarly pressure prices lower.
Articles The Commodities Feed: Sustained Middle East flows fail to dent oil prices Published 02:55 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Oil prices remain firmly supported, with ICE Brent hovering around $110/bbl as markets stay focused on persistent risks to Middle Eastern supply Warren Patterson and Ewa Manthey Source: iStock Energy – China continues to draw down crude inventories Oil prices remain well-supported amid ongoing tensions in the Middle East despite relatively strong Persian Gulf flows. This suggests the market is pricing in a significant risk premium, given the situation's volatility. However, if flows continue uninhibited despite the geopolitical environment, the risk premium would likely erode slowly.
Clearly, there are no signs of this yet. Another major issue in the oil market is logistics. Namely, the record tanker freight rates we are seeing, given the less efficient use of tankers due to developments in the Middle East.
The US is considering steps to allow the sale of sanctioned tankers, which would increase tanker capacity in the legitimate market. The idea is to bring freight rates down and reduce the delivered cost of oil to destination. However, uncertainty remains about how much capacity this could add to the legitimate market.
The process's duration means it may not offer immediate relief. China released output data yesterday showing that domestic crude oil production rose 0.6% month-on-month and 2.5% year-on-year to 4.45m b/d in September. Meanwhile, refineries processed a little over 14m b/d of crude over the month, up 0.4% MoM but still down 8.4% YoY.
This is the largest amount of crude processed by Chinese refiners since March. Along with previously released trade data, this suggests that China drew down crude oil inventories at a pace of a little more than 500k b/d, or 16m barrels through September. The numbers also suggest that apparent demand fell by 2.7% MoM and 15.2% YoY to 12.75m b/d in September.
Metals — China aluminium supported by strong smelter margins Data from China’s National Bureau of Statistics (NBS) showed primary aluminium production increased 3.1% YoY to 3.9mt in September, supported by high smelter operating rates and healthy profit margins amid global supply disruptions. Cumulative output rose 3.8% YoY to 35mt during January-September 2026, keeping annual production on course to approach the government’s capacity cap of around 45mt. Meanwhile, crude steel production edged up to 73.6mt in September.
Demand, however, remained subdued due to the prolonged weakness in China’s property sector. As a result, year-to-date crude steel output is still down 2.9% YoY to total 724.8mt in the first nine months of 2026. Agriculture — India ethanol policy eases sugar supply concerns Sugar prices fell for a second consecutive session, touching US¢20.5/lb.
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