Citigroup believes that despite the resumption of oil exports in the Gulf region, the risks for oil prices remain skewed to the upside.

Reuters, October 22 - Citi stated on Thursday that although crude oil exports from the Gulf region have recovered, short-term risks to oil prices remain tilted to the upside as shipping bottlenecks continue to cause tightness in actual supply deliveries.

• "The normalization of crude oil exports from the Arabian Gulf region is mainly reflected in export volumes rather than logistics. Unprecedented inefficiencies in maritime shipping have resulted in persistently high landed costs for crude oil," Citi said.

• In September, more than 1 million barrels per day of crude oil exports from the Gulf region were completed via ship-to-ship transfers, accounting for about 7.5% of the region's crude oil flows, compared to almost zero prior to the outbreak of U.S.-Iran conflict. Citi stated that this increase highlights the increasingly complex logistics behind the export recovery.

• Data shows that in September, the oil flows from the Gulf region excluding Iran (link) rebounded to over 81% of prewar levels, mainly due to the recovery of Saudi exports—even though the country's oil infrastructure was attacked and Iranian strikes on shipping in the region continued to escalate. Meanwhile, due to U.S. sanctions, Iran's export volume has dropped to zero.

• Before the U.S. and Israel launched attacks against Iran in late February, oil and liquefied natural gas shipments through the Strait of Hormuz accounted for about one-fifth of the global total.

• Citi stated that recently, freight rates for VLCCs on the Persian Gulf to China route have approached $250 per ton, or about $35 per barrel—more than 20 times the average level of the past decade.

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