Near pre-war, under escort.

For most of this conflict the question has been whether Gulf crude could physically reach its buyers. The weekend brought the clearest answer yet, and it is a good one. Oil flows through the Strait of Hormuz have risen to near pre-war levels, achieved through a combination of alternative transport routes and, notably, US military escorts for some vessels. More striking still, Middle East crude exports exceeded pre-war levels on four of seven days in the last week of September. That happened despite tanker attacks in the strait continuing, which is the detail that makes it meaningful: the system is now moving oil through the disruption rather than around it or in spite of it.

The price has responded. Brent fell 35 cents, or 0.34%, to $101.90 a barrel by 0115 GMT, and US crude was at $90.49, down 62 cents or 0.68%. Behind that sits Friday’s G7 agreement to release 100 million barrels of diesel and other reserves through the International Energy Agency over the next four months, with an initial focus on diesel. Two forces are therefore pushing the same way for the first time in weeks: recovering physical supply out of the Gulf, and a coordinated release from consuming nations.

A note on how we are reporting this. On 29 September we published vessel-transit figures that our sources did not support, and we withdrew them the following day. The flows claims above are quoted exactly as the source states them — “near pre-war levels” and “four of seven days” — and we have attributed the escort arrangement rather than characterising its scale, because the source does not give one. We would rather be less vivid and right.

• The rate calendar moved — October odds to about 17%, December still above 75%.
• Yields peaked and turned — a 2002 high on Thursday, easing after Friday’s payrolls.
• Supply is recovering — Hormuz flows near pre-war, with exports above pre-war on four of seven days in late September.

Tap Week or Q3 on each card. Week = 28 Sep–2 Oct; commodity levels reflect this morning’s early trade at the time stated. Every figure shown is one a named source states directly; where a source gives a direction without a figure, we give the direction only. Single names appear as news, not recommendations. Times GST.

These carry the wider rate bands we set yesterday, after our rate calls were wrong in all three scenarios for two consecutive weeks. Crude and rates are judged independently, so a scenario can be half right.

Times GST unless stated. Calendar items are scheduled events or watch-points and may change; geopolitical developments are fast-moving and accounts are often contested.

It is worth marking how far this has travelled. In the middle of September a drone strike shut the East–West pipeline, the Strait of Hormuz was blockaded, and the central question for the region was whether its oil could reach a buyer at all. This morning, flows through the strait are reported at near pre-war levels and Middle East crude exports exceeded pre-war levels on four of seven days in the last week of September. The mechanisms are a combination of alternative transport routes and US military escorts for some vessels, and the achievement is that this has happened while tanker attacks in the strait continue. The region has not had the disruption removed; it has built a way of exporting through it.

The consuming nations have added to that from the other side. The G7 agreed on Friday to release 100 million barrels of diesel and other reserves through the International Energy Agency over four months, with an initial focus on diesel. Brent at $101.90 and US crude at $90.49 in early trade reflect both forces. What has not changed is the diplomacy: Iran’s proposal was rejected, no meeting is scheduled, and the strait is still a contested waterway rather than a normal one.

Vault Wealth’s read

This section sets out how we are interpreting events. It is commentary, not guidance, and nothing here is a recommendation to buy, sell or hold anything.

1. 01Adaptation is not resolution, but it is not nothing either. We have used that phrase sceptically for weeks. Exports exceeding pre-war levels on four of seven days is the point at which adaptation becomes a durable fact rather than a workaround, and we would rather say so than keep hedging.
2. 02The escorts are the mechanism to watch. Flows recovering because a navy is accompanying tankers is a different kind of stability from flows recovering because a conflict has ended. It depends on a policy that could change.
3. 03The rate question has not improved with the oil question. December remains above 75%. For dollar-pegged economies the cost of borrowing is being set in Washington on American data, and cheaper crude does not reach it.
4. 04What would genuinely change the picture. December odds falling meaningfully below 75%, a verified ceasefire, or normal commercial transit without escorts. The third is now closer than it has been.

How any of this bears on an individual portfolio depends on circumstances we cannot see from here — time horizon, currency exposure, liquidity needs and existing holdings among them. That conversation belongs with a licensed advisor, and we would encourage clients with questions about the themes above to have it.