A chokepoint running at half capacity

Oil flows through the Strait of Hormuz remain severely disrupted eight months into the US-Israeli war on Iran, averaging just 49% of pre-war levels, according to the latest Kpler data cited by Dow Jones. That is equivalent to about 8.46 million barrels a day through a waterway that normally carries roughly a fifth of the world's oil.

The shortfall is a central reason crude has held at elevated levels despite repeated diplomatic efforts, with the most active Brent contract, for January delivery, trading above $113 a barrel on Friday and West Texas Intermediate near $104.

Why traders are watching Sunday

Attention now turns to OPEC and its allies, who meet virtually on Sunday to review production policy for December. The group has kept its November targets unchanged from September, with Saudi Arabia's required production at 10.478 million barrels a day, but targets have mattered less than actual barrels in recent months.

Gulf producers have been pumping below their formal quotas as war-related disruptions constrain exports, and the group's own review of members' sustainable capacity, needed to set 2027 quotas, has been delayed by the conflict.

What it means for fuel buyers

For importers, the combination of restricted Hormuz flows and a producer group unable to fully deliver its quotas keeps a large risk premium in prices. European gas prices have also climbed back above $100 per megawatt-hour as traders price wider energy disruption.

Sunday's meeting is unlikely to change December output on its own, analysts note, because the binding constraint is physical disruption rather than policy. Until tanker traffic through Hormuz recovers towards pre-war levels, or a diplomatic breakthrough eases the threat to shipping, oil markets are expected to stay hostage to each new incident in the Gulf.

Sources: Morningstar / Dow Jones