Why Oil Still Costs Almost USD 100 a Barrel Even as Tankers Return to the Strait of Hormuz
Tanker traffic through the Strait of Hormuz has recovered sharply in recent days, but oil has not got much cheaper. Brent crude, the main international benchmark, was about USD 98 a barrel on Wednesday, September 30, and above USD 100 at some points that day, according to the New York Times and El País. This explainer sets out why.
What has changed in the Strait of Hormuz
The strait is a narrow sea route through which a large share of the world's oil and gas passes. Since the US and Israel launched a war on Iran on February 28, 2026, shipping there has been disrupted and attacked.
Recent estimates show a rebound, according to El País:
- JP Morgan estimates flows have rebounded to about 17.5 million barrels a day, about 98% of the pre-war level.
- Vortexa puts crude shipments through the strait at a six-month high of 14 million barrels a day.
- Goldman Sachs estimates total crude exports from Persian Gulf countries, through Hormuz or alternative pipelines, at more than 23 million barrels a day in the last week, similar to the 2025 average.
- Goldman also estimates Saudi exports more than doubled in September, to 11.6 million barrels a day.
The New York Times reports that more Middle East oil is flowing than at any point since the war began.
Why prices have not fallen
1. Traders worry the conflict could restart
The New York Times reports that earlier optimism about an enduring peace deal has given way to concern that hostilities could restart. US-Iran negotiations remain unresolved. El País says investors keep a risk premium in the price, and Goldman Sachs analysts wrote that they remain concerned about a new escalation that could damage more energy infrastructure.
2. The world's emergency stocks are low
Governments and companies have been draining oil inventories for seven months to keep prices down. The New York Times says the US has taken more than 130 million barrels from its strategic reserve since the war began, leaving government stocks at their lowest level since 1982. With smaller buffers, any new attack would hit supply harder. TD Cowen analyst Jason Gabelman described the industry as in "a much more vulnerable position".
3. China is buying more
China cut imports early in the war, which held prices down. It has been returning to the market. According to S&P Global Energy, as cited by the New York Times, about 30% more oil was loaded onto tankers headed for China in September than in May. Goldman Sachs says China is also buying less from Russia and Iran, whose sanctioned oil is cheaper, so there is more competition for other sources.
4. Shipping and insurance costs are very high
Argus data cited by the New York Times shows moving oil from the Gulf to East Asia costs about USD 34 a barrel, a record, up from an average of about USD 3 in January. The physical price for oil to be loaded soon is almost USD 121 a barrel, before transport.
5. Refined fuels are the bottleneck
El País reports that while crude exports are recovering, gasoline, diesel and jet fuel exports from Gulf countries are only about half the 2025 average, according to Goldman Sachs. Some refineries hit early in the war have not fully restarted, and refined products are riskier and costlier to ship through the strait. In the US, diesel averaged USD 6.41 a gallon on Wednesday, up more than 70% since the war began, while crude rose about 35%, the New York Times says.
Not safe yet
El País notes that the UK Maritime Trade Operations agency reported three incidents in a few hours involving two oil tankers and an LNG carrier struck by projectiles, which would be the most attacks in a single day since July. JP Morgan analysts concluded that more crossings should not be confused with greater safety, but reflect the sector's growing ability to operate under sustained risk.
Oil analyst Rory Johnston put it this way: Middle East exports are much higher, but at a great cost, and "we are not back to normal."
What it means for India
India imports most of its crude. High oil is one reason the rupee has weakened and inflation is rising. See why the rupee is falling and the RBI's rate decision.
What to watch
- Whether tanker transits keep rising and attacks stop.
- Any US-Iran agreement.
- Refinery restarts in the Gulf.
- Refilling of strategic reserves, which would add demand.
Facts checked October 1, 2026. Figures come from the cited reports and may be revised.
Sources
- New York Times, "Oil Is Flowing From the Persian Gulf, but Prices Remain High. Why?" (October 1, 2026), as republished by DNYUZ: https://dnyuz.com/2026/10/01/oil-is-flowing-from-the-persian-gulf-but-prices-remain-high-why/
- El País English, "Tanker transits through Strait of Hormuz approach prewar figures" (October 1, 2026): https://english.elpais.com/international/2026-10-01/tanker-transits-through-strait-of-hormuz-approach-prewar-figures.html