Saudi oil exports approaching pre-war levels, resumption of traffic in the Strait of Hormuz impacting the Fed's hawkish path.

Following the temporary peace agreement between Washington and Tehran, oil and gas-producing countries in the entire Persian Gulf region have increased shipments, with the major oil-producing country, Saudi Arabia, exporting the largest amount of oil since the Iran war blockade of the Strait of Hormuz. The latest ship tracking data shows that on Thursday, four super oil tankers loading crude oil at Saudi Arabia's main oil and gas export hub appeared in the Gulf of Oman. This is the largest number of ships leaving in approximately two weeks since the peace agreement took effect. Tracking and statistical data show that about 8 million barrels of Saudi crude oil were shipped out of the waters in the direction of the Strait of Hormuz on Thursday, setting a record for the largest single batch/daily shipment since the peace agreement took effect, highlighting the rapid recovery of crude oil logistics after the reopening of the Strait of Hormuz, and the continuing decline in energy risk premium. In addition, since Saudi Arabia resumed oil tanker loading in the Persian Gulf, its crude oil exports have surged close to pre-war levels. This further proves that after the US-Iran reached a mid-term peace agreement, the supply of oil-producing countries in the region is in the process of recovery. In the six days ending Wednesday, Saudi Arabia's daily export volume reached 6.3 million barrels. This has brought its crude oil flow to nearly the average level of 2025 and reached nearly 90% of the level in February this year - before the Iran war broke out, Saudi Arabia and its Gulf neighbors had significantly increased supply in February. As Saudi super oil tankers begin to leave from the recently reopened Strait of Hormuz, the most dangerous upside risks to US inflation are weakening, but it does not mean that the inflation problem has been completely resolved. However, for the Federal Reserve, this is not yet a sufficient condition to immediately shift to easing policy, but a necessary condition to shift from "preventing inflation" to "waiting for data to confirm inflation recovery". US May CPI data shows that the energy index rose by 3.9% month-on-month, with gasoline rising by 7.0%, and the energy component contributing over 60% to the overall CPI increase for the month. Energy prices have risen by 23.5% over the past 12 months, with gasoline up by 40.5%, indicating that the previous oil price shocks have substantially raised inflation readings. The latest Short-Term Energy Outlook from the EIA also points out that higher global crude oil prices are pushing up expectations for US refined oil prices, with wholesale diesel and aviation coal prices significantly revised upward compared to February forecasts, and gasoline wholesale price expectations also significantly higher. Therefore, the gradual recovery of the Strait of Hormuz in terms of currency policy means a reduced urgency for the Federal Reserve to further hike interest rates, rather than immediately opening the door to substantial rate cuts; only when energy prices fall further to suppress inflation expectations, and core services, wages, and housing inflation cool simultaneously, will the Federal Reserve have more reasons to shift from "highly restrictive rates" to a truly easing cycle. The collective departure of Saudi super oil tankers signifies a large-scale decline in oil risk premiums As about 8 million barrels of crude oil left the Persian Gulf with four Saudi super oil tankers on Thursday - passing through the Strait of Hormuz and appearing in the Gulf of Oman, the marginal easing of the blockage risk in the oil supply chain is bearish for oil prices' geopolitical premium, marginally positive for US inflation cooling, and gradually turning market expectations for the Federal Reserve to move towards a dovish interest rate-cutting path. This is yet another piece of evidence indicating that with the reopening of the transportation waterway following the US-Iran agreement to end a new round of geopolitical war in the Middle East, OPEC's largest oil-producing country is significantly increasing oil exports. Media reported on Wednesday that Saudi Aramco, the state-owned oil giant, has temporarily sold at least 6 million barrels of crude oil to Asian customers, unlike its standard practice of long-term agreements. Traffic through the Strait of Hormuz has started to pick up, with more and more ships moving in fleets to pass through the strait. Large ships carrying energy typically pass through a channel managed by the United States in the waters of Oman, but some ships also use a safer route closer to the Iranian coast. Another Saudi-owned oil tanker that had loaded crude oil at Ras Tanura port left the Strait of Hormuz earlier this week. Currently, only a limited number of Saudi oil tankers remain in the Persian Gulf. Among the four tankers still near the Ras Tanura port, two are sending signals indicating they are fully loaded, and another has not updated its draft depth, but appears to have undergone a large-scale loading process in the port in recent. US inflation pressures receive critical buffer Saudi Aramco has resumed loading at Ras Tanura port and begun temporary spot sales to Asian customers; meanwhile, oil prices have continued to fall due to easing supply disruption concerns, with Brent and WTI falling back to near lows since February 27. Australian-based international financial giant Macquarie recently significantly lowered its benchmark forecast for international oil prices in 2026 and 2027, largely due to the firm's expectation that oil flows from the Middle East will quickly return to normal as the Strait of Hormuz reopens under the US-Iran peace agreement framework. Recently, major Wall Street banks, including Goldman Sachs and Morgan Stanley, have all cut their expectations for oil price returns, downplaying the "war risk premium" in oil price pricing. At the same time, Brent has fallen to around $70 per barrel, with market speculating positively on the US-Iran negotiation outcome and the resumption of energy flow through the Strait of Hormuz. With oil and natural gas energies being massively transported out of the Persian Gulf following the temporary peace agreement between the US and Iran, strategists at Macquarie speculate that the international benchmark crude oil price, Brent, will average $77 per barrel in 2026, significantly lower than their previous forecast of $89 per barrel and the $200 per barrel expected in an extreme US-Iran conflict scenario. The firm has also revised down its 2027 Brent average price outlook from $74 per barrel to $64 per barrel. The ongoing recovery of energy supplies in this latest process signals a reverse repair of the "energy-induced inflation shock" driven by the US-Iran war, the blockade of the Strait of Hormuz, and the shipping risk premium, as input costs for crude oil, gasoline, diesel, aviation coal, and liquefied natural gas continue to fall, they will first suppress the energy components in the overall US CPI and PCE, then weaken further inflation pressure through channels such as transportation, airfares, chemicals, agricultural input costs, and corporate profit margins. However, for the Federal Reserve, this is not yet a sufficient condition to immediately shift to easing policy, but a necessary condition to shift from "preventing inflation" to "waiting for data to confirm inflation recovery". Only when energy falls further to suppress inflation expectations, and core services, wages, and housing inflation cool simultaneously, will the Federal Reserve have more reasons to shift from "highly restrictive rates" to a truly easing or monetary policy ease cycle.