Why Is Oil Not Above $100? Key Reasons Brent Crude Remains Below $100 Amid Supply Disruptions

Why is oil not above $100 despite major supply disruptions? That question has become increasingly important for global energy markets as the latest escalation in the U.S.-Iran conflict has disrupted oil flows through key Middle East routes, including the Strait of Hormuz and the Red Sea.

Brent Crude has rallied sharply in September, but it has remained below the psychologically important $100-a-barrel threshold. At first glance, that may appear surprising. Middle East crude shipments have fallen significantly since the Iran war began, while the latest escalation has created fresh concerns about energy infrastructure and shipping.

The explanation lies in the balance between supply losses and the amount of oil that is still reaching international markets. Alternative export routes, higher production from non-OPEC producers, weaker oil demand and China’s large reserves are helping cushion the disruption.

At the same time, physical oil markets are showing much greater tightness than the headline Brent price suggests. That difference is one of the most important clues to understanding where Oil Prices could go next.

How Much Middle East Oil Supply Has Been Disrupted?

According to Argus, crude oil shipments from Middle East producers are currently around 11 million barrels per day (bpd), compared with approximately 18 million bpd before the Iran war began seven months ago.

That represents a substantial reduction in regional flows. However, oil prices are determined not simply by the amount of production or exports lost but by the amount of supply available relative to global demand.

Even when a major disruption occurs, prices may not immediately cross $100 if other producers, alternative shipping routes, inventories and weaker consumption help compensate for the missing barrels.

This is essentially what is happening in the current market.

Reason 1: Significant Oil Volumes Are Still Moving Through the Strait of Hormuz

The Strait of Hormuz remains central to the oil-price story. It is one of the world’s most important energy shipping chokepoints, making any disruption there particularly important for crude markets.

Before fighting erupted again on August 30, around 8 million to 9 million bpd was flowing through Hormuz in the week before the escalation, according to Rystad Energy Chief Economist Claudio Galimberti.

Since then, flows have fallen below 2 million bpd. However, the daily moving average has remained around 4 million to 5 million barrels, according to Galimberti. That level of ongoing movement is one reason the benchmark Brent price has not necessarily reflected a complete supply shutdown.

Industry estimates have placed daily exports through the route at between 6 million and 8 million barrels, illustrating the uncertainty surrounding actual flows.

Kpler data also showed that there had been no visible very large crude carrier exiting the strait since September 2 as of Monday. Yet the market had already experienced periods when exports recovered dramatically.

During the temporary U.S.-Iran peace deal in July, Hormuz exports reached around 16 million bpd, close to pre-war levels.

This history matters because traders are assessing not only today’s disruption but also the possibility that flows could recover if geopolitical conditions improve.

Reason 2: Gulf Producers Are Finding Alternative Ways to Move Oil

Oil producers in the Gulf are not completely dependent on a single shipping route. Alternative ports, pipelines and ship-to-ship transfers can help reduce the impact of disruptions in the Strait of Hormuz.

Gulf producers have been using alternative routes and are expected to continue arranging cargo movements outside Hormuz where possible.

Saudi Arabia provides an important example. Saudi Aramco resumed loadings from Ras Tanura inside the Gulf in August, while exports from Yanbu on the Red Sea remained under pressure from a naval blockade involving Iran-aligned Yemeni Houthis.

Yanbu exports fell to a six-month low of approximately 1.429 million bpd in August, compared with an average of around 3.9 million bpd during the previous three months, according to provisional Kpler data.

However, alternative export infrastructure elsewhere has helped compensate for some of the lost flows.

Egypt’s Sidi Kerir Becomes More Important

Exports from Egypt’s Sidi Kerir terminal reached approximately 2.139 million bpd in August, more than twice June’s volumes.

The increase illustrates how the global oil market can adapt when one transportation route becomes difficult to use. Additional barrels do not necessarily have to come from newly produced oil; existing supplies can sometimes be redirected through different ports and logistical networks.

Other Gulf Producers Are Maintaining Significant Exports

Several major oil-producing countries have continued sending substantial volumes to international markets.

• Iraq: Exports rebounded to around 2.34 million bpd in August.
• United Arab Emirates: Shipments were around 2.9 million bpd in July and August after reaching a record level in June.
• Kuwait: Crude exports recovered to approximately 1 million bpd during July and August.

These flows are important because they reduce the immediate size of the global supply deficit.

Iran, however, has experienced a sharp decline in oil exports as a result of the U.S. blockade, adding to the overall disruption in the region.

Reason 3: The United States, Canada and Guyana Are Increasing Oil Production

Another reason Brent has remained below $100 is that producers outside the Middle East are adding supply.

Non-OPEC producers, including the United States, Canada and Guyana, are expected to increase combined production by approximately 1.4 million bpd this year, according to Rystad Energy founder Jarand Rystad.

That additional production does not completely replace the barrels affected by Middle East disruptions, but it can reduce the overall shortage.

The global oil market is highly interconnected. A barrel produced in North America or South America cannot physically replace every barrel from the Gulf in every location, but additional global supply can nevertheless ease pressure on overall inventories and prices.

Russia Is Also Keeping Oil Exports Relatively High

Russian crude exports have remained another source of supply for global markets.

Kpler data showed Russian crude exports at around 5.5 million bpd in July and August. That was below the 6.4 million bpd peak recorded in June, but still around 23% higher than February levels.

One reason for the elevated exports is weaker refinery processing after damage to Russian refineries caused by Ukrainian attacks.

However, Russia has lowered its forecast for 2026 oil production to a 17-year low. If production declines further, Russian exports could eventually become another factor supporting higher global prices.

Reason 4: Oil Demand Destruction Is Significant

Perhaps the most important explanation for Brent staying below $100 is the demand side of the market.

Oil prices depend on both supply and consumption. A major supply disruption can push prices higher, but the effect can be partially offset if consumers and industries reduce their oil use.

Rystad estimates that demand destruction in petrochemicals and transportation fuels remains significant, at around 3.5 million bpd in the third quarter, compared with 4.5 million bpd in the second quarter.

That is a substantial amount of demand that is no longer reaching the market in the same way.

In other words, the current oil market is not simply a story of missing supply. It is also a story of reduced consumption.

China Is Playing a Major Role in Weakening Oil Demand

China is particularly important because it is the world’s largest crude oil importer and has enormous influence over global energy demand.

The country has increasingly been described as the “new demand OPEC” because changes in Chinese oil consumption can have a significant impact on global markets.

Seaborne crude shipments to China fell to approximately 7 million bpd in July and August, down from more than 11 million bpd in February.

The decline reflects structural changes in China’s energy consumption, including increasing transport electrification and greater use of coal-based chemicals.

This is a crucial development for oil prices. If China requires fewer imported barrels, a portion of the supply disruption elsewhere can be absorbed without producing an equivalent increase in crude prices.

China’s Huge Oil Reserves Are Giving Markets More Confidence

China also has another source of protection: its large crude oil reserves.

Kpler estimates China’s oil reserves at approximately 1.17 billion barrels. These inventories provide an additional cushion during periods of supply uncertainty.

Large reserves do not eliminate the possibility of higher prices. However, they can reassure traders that an immediate shortage does not necessarily have to translate into a catastrophic supply crisis.

This inventory cushion is one reason the market can remain relatively calm even when physical shipments are disrupted.

Physical Oil Markets Tell a More Alarming Story

Although benchmark Brent has remained below $100, physical oil markets are showing signs of considerably greater tightness.

Spot premiums have rebounded to levels last seen in April. Dubai and Oman prices for cargoes loading in November were around $19 to $20 a barrel above Dubai quotes, according to Reuters data cited in the report.

Oman futures were at $104.54 a barrel on Monday, while cash Dubai traded at approximately $105.10 a barrel.

This creates an important distinction between the headline Brent benchmark and prices being paid for physical barrels.

Argus Chief Economist David Fyfe described the physical market as extremely tight, with the diesel market showing particularly strong signs of shortage.

Why Physical Oil Prices Can Be Higher Than Brent

Brent is a major global benchmark, but the physical oil market consists of individual grades, locations, delivery dates and transportation arrangements.

When specific physical barrels become scarce, buyers may be willing to pay significantly higher premiums to secure immediate or future supplies.

This means the headline Brent price can sometimes understate the stress visible in parts of the physical market.

The current divergence is therefore worth watching. If physical tightness persists or spreads across more markets, benchmark prices could eventually respond.

Diesel Shortage Could Become a Bigger Concern

The pressure is not limited to crude oil. Diesel markets are also showing signs of significant tightness.

The latest escalation is expected to curb Gulf exports while demand rises as refiners increase output of diesel. In the United States, diesel prices have reached a record high, according to the report.

Diesel is especially important because it powers large parts of freight transportation, agriculture, construction and industrial activity.

A diesel shortage can therefore have economic consequences beyond the oil market. Higher diesel costs can raise transportation and logistics expenses, potentially feeding into prices across the broader economy.

Why Oil Could Still Cross $100

The fact that Brent has remained below $100 does not mean the market cannot cross that level.

Several developments could change the current balance:

• A further escalation in the U.S.-Iran conflict could reduce Gulf exports more sharply.
• A prolonged disruption to the Strait of Hormuz could remove more barrels from international markets.
• Alternative export routes could become unavailable or reach their logistical limits.
• Refiners could increase crude purchases, tightening physical markets further.
• Diesel shortages could increase refinery demand for crude.
• Lower Russian production could reduce another important source of supply.
• Demand could recover faster than expected in major consuming economies.

If several of these factors occur simultaneously, the market could move through the $100 threshold relatively quickly.

Why Oil Could Also Remain Below $100

The opposite scenario is equally important. Brent could remain below $100 if the current supply disruptions are offset by alternative supplies and weaker demand.

Higher production from the United States, Canada and Guyana could continue to provide additional barrels. Chinese oil demand could remain subdued as electrification expands, while China’s large inventories could provide further protection.

If geopolitical tensions ease and shipping through key routes gradually normalizes, some of the risk premium currently embedded in oil prices could also disappear.

This explains why traders are not automatically pricing Brent above $100 simply because Middle East supply has fallen.

Analysts Are Raising Their Oil Price Forecasts

Several major financial institutions have increased their oil-price expectations in response to the latest disruptions.

Morgan Stanley expects Brent to average $100 a barrel in the fourth quarter.

Goldman Sachs has also raised its Brent and West Texas Intermediate forecasts by $5 a barrel for December 2026 and 2027, citing expectations that Middle East shipping disruptions could continue into next year.

Goldman Sachs now forecasts Brent at $85 a barrel and WTI at $80 for December 2026. For 2027, its forecasts are $80 for Brent and $75 for WTI.

The different forecasts demonstrate how uncertain the outlook remains. Some analysts see a prolonged period of disruption, while others expect supply adjustments and weaker demand to prevent an extended price spike.

The Biggest Question Is Not Just Supply—It Is Duration

The most useful way to understand the current oil market is to focus on duration.

A temporary disruption can cause a sharp price spike but may not permanently alter the market. A disruption lasting months can have a very different effect because inventories decline, alternative routes become strained and refiners compete more aggressively for available barrels.

The longer Gulf shipping disruptions continue, the harder it may become for alternative supplies and inventories to absorb the shortfall.

That is why current physical-market tightness deserves attention even though Brent remains below $100.

What the Oil Market Is Signalling Right Now

The current market is sending two seemingly contradictory signals.

The first signal is relatively reassuring: Brent remains below $100 because significant volumes are still moving, alternative routes are being used, non-OPEC production is increasing and oil demand has weakened.

The second signal is more concerning: physical oil markets are considerably tighter, spot premiums have risen and diesel markets are showing signs of shortage.

Both signals can be correct at the same time.

The benchmark price reflects the broader global market, while physical premiums reveal how difficult it can be to obtain particular barrels at particular locations and times.

What Happens Next Could Decide Whether Brent Breaks $100

The next phase of the oil market will depend heavily on geopolitical developments and the ability of exporters to maintain alternative supply routes.

If Middle East shipments remain constrained but alternative exports continue to grow and demand stays weak, Brent could remain below $100 despite elevated physical premiums.

However, if the conflict causes a deeper and longer-lasting disruption to Gulf exports, the current balancing mechanisms could come under increasing pressure.

The key indicators to watch are therefore Strait of Hormuz flows, Gulf export volumes, Chinese crude imports, global inventories, refinery demand and diesel prices.

Conclusion: Brent Below $100 Does Not Mean the Oil Market Is Comfortable

The answer to why oil is not above $100 despite supply disruptions lies in the unusual balance between lost Middle East supply and the market’s ability to adapt.

Significant volumes are still reaching international markets. Gulf producers are using alternative routes, while the United States, Canada and Guyana are increasing production. Russian exports remain substantial, and weaker demand—particularly in China—is reducing the number of barrels the global market needs.

China’s estimated 1.17 billion barrels of reserves also provide a significant cushion against an immediate supply shock.

Yet the situation is far from comfortable. Physical oil markets are already considerably tighter than the headline Brent price suggests, while diesel markets are showing signs of shortage. Several major banks have consequently raised their forecasts and see a meaningful possibility of Brent averaging around or reaching $100 in coming periods.

The biggest takeaway is that Brent staying below $100 should not be mistaken for a lack of supply stress. The real test will be whether alternative supplies, inventories and weaker demand can continue to absorb the Middle East disruption if it persists into the coming months.