Saudi Pipeline Shutdown Causes Market Distortions and Price Volatility

Brent crude oil prices have stabilized around $101-$102 per barrel after four consecutive sessions of decline. The spot premium has widened, causing distortions in the market structure.

Following a drone attack on September 10, Saudi Arabia's export flows were redirected due to the shutdown of the East-West crude pipeline and loading restrictions at Yanbu Port. Since then, shipments from terminals such as Ras Tanura have increased, with transshipment arrangements near Sohar, Oman, also expanding.

Market sources indicate that Saudi Aramco has provided informal verbal assurances to at least three Asian refiners that loading at Yanbu could resume, but no formal written notice or timetable has been announced. This has led to vessel scheduling and regional price differentials becoming a key source of pricing friction for refiners' procurement.

European buyers face tighter quota constraints, with Saudi Aramco informing two European refineries last week that they would receive no crude oil under their October long-term agreements. As a result, buyers have turned to spot cargoes from the North Sea and Mediterranean to fill the shortfall.