Saudi Arabia Routes 5 Million Barrels Daily Through Red Sea as Brent Retreats to $71.98
Saudi Aramco's emergency rerouting has partially offset Hormuz supply losses, but a cumulative billion-barrel shortfall since February continues to weigh on the market.
ICE Brent crude front-month settled near $71.98 on Monday (2026-07-06), extending a retreat from the $85 level that prevailed in mid-May (2026-05-19) as Saudi Arabia's partial success in rerouting exports through the Red Sea continues to ease the acute supply fears that emerged when the Strait of Hormuz was effectively blocked in late February 2026. WTI crude front-month traded at $68.55.3
Saudi Aramco has rerouted more than 5 million barrels per day through its Red Sea terminals, providing an alternative export corridor for crude that would otherwise have been stranded in the Persian Gulf. The company estimates it can sustain roughly 70% of its usual crude output through this route — a figure the chief executive simultaneously offered as a partial solution and a warning, stating there would still be "drastic" consequences for the market if the conflict blocking Hormuz continued.2,3
The arithmetic behind that warning is not comfortable. According to industry estimates cited by Aramco, every week of Hormuz disruption removes approximately 100 million barrels from global supply. Since hostilities began in late February 2026, the cumulative shortfall has reached close to 1 billion barrels of crude oil. The Red Sea rerouting covers a portion of that, but the existing infrastructure's ceiling at 5 million barrels per day leaves a significant portion of Saudi export capacity constrained.2
The price decline from May's levels reflects a recalibration rather than a resolution. Brent fell 14% in a single session on Tuesday (2026-05-19) to around $85 when supply relief via the Red Sea first became apparent — markets took the partial improvement as significant enough to reprice sharply lower. The further drift toward $71.98 by Monday (2026-07-06) suggests that incremental routing improvements have continued to provide modest relief, though prices remain at levels consistent with a market still pricing in sustained supply disruption.3
The IEA's May monthly report sounded a note that has not resolved. The agency warned that global oil supply had continued to decline, with inventories depleting at a pace that could intensify market pressure during the peak summer demand period. Rapidly falling inventory levels compounded the pressure from constrained production, even as demand approached its seasonal peak.4
Morgan Stanley's outlook frames the recovery challenge in scale. The bank forecast the global market would lose a further billion barrels over the course of 2026, even after any Hormuz reopening, citing the time required to restart oilfields, repair refineries, and reposition the tanker fleet. That framing sets a floor on how slowly the market can rebalance once a resolution occurs — the moment of reopening and the moment of supply normalisation are not the same date.4
OPEC+ spare capacity stood at approximately 5.1 million barrels per day as of late 2023, representing around 5% of global demand. Saudi Arabia has been drawing on this buffer through its Red Sea facilities, but even combining that spare capacity with the rerouted volumes, the gap between current supply and pre-disruption levels remains substantial.1
The OPEC basket traded at $69.75 and Dubai Crude at $64.51, both below Brent. The spread structure reflects a market in which physical supply availability and logistics — specifically how quickly tanker positioning can be restored — will drive the next phase of price discovery more than headline diplomatic developments. Morgan Stanley's restart timeline, not the moment of any ceasefire announcement, is the variable most likely to determine where crude settles once the geopolitical noise dissipates.