Crude oil flows through the Strait of Hormuz and the whole Middle Eastern region have recovered to close to pre-war levels, vessel-tracking services have been signaling for over a month now.

Middle Eastern benchmarks have been weakening for weeks, suggesting an oil glut may be building amid rebounding Persian Gulf exports and global demand destruction amid high prices.

On the face of it, an oversupply of crude oil could be forming. But the costs to refiners and consumers are not falling. War, insurance premiums, and record tanker rates have raised the cost of transporting a barrel of crude oil from about $5 per barrel before the war to as much as $30 a barrel, and at times even higher.

Middle Eastern producers are forced to slash their official selling prices to win customers because the surge in Persian Gulf exports is weakening the physical prices of local grades. Moreover, amid high freight costs, Middle East’s crude oil could only win Asia’s price-sensitive buyers with lower prices.