Oil Risks Skewed to Upside despite Recovery in GCC Exports

Citi said that near-term risks to oil prices remain skewed to the upside despite a recovery in GCC crude exports, as shipping bottlenecks continue to keep delivered supplies tight.

* "The normalization of GCC oil exports has been volumetric rather than logistical, with unprecedented shipping inefficiencies keeping delivered crude costs elevated," Citi said

* More than 1 million barrels per day of GCC crude exports were moved via ship-to-ship transfers in September, equivalent to about 7.5% of regional flows, compared with virtually none before the US-Iran conflict. Citi said the rise underscored the increasingly complex logistics behind the recovery in exports

* GCC oil flows excluding Iran rose to more than 81% of pre-war levels in September, data showed, led by a recovery in Saudi exports despite attacks on the kingdom's oil infrastructure and escalating Iranian attacks on regional shipping. Iranian exports, meanwhile, fell to zero because of a US blockade

* Before US-Israeli attacks on Iran began in late February, the Strait of Hormuz handled about one-fifth of global oil and liquefied natural gas supplies

* Freight rates for very large crude carriers on the GCC-China route recently approached US$250 per metric ton, or about US$35 per barrel, more than 20 times the average level over the previous decade, Citi said