The flat settlement hides a market pricing two different problems: a Gulf crude shock that is easing at the margin, and a refined-products squeeze that is not. Brent’s premium of around $11 over WTI shows how much of the risk sits in seaborne, Middle East-linked barrels rather than in US domestic supply. That leaves near-term risks skewed to the upside for products, with a likely Gulf of Mexico storm threatening US refining while diesel is already at record levels. A third straight US crude build would support the view that high prices are starting to ration demand, but a fresh strike on Saudi export infrastructure would quickly overwhelm that signal.
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Earlier:
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Oil went nowhere on Tuesday, but only because returning Saudi barrels and a G7 stock release were matched almost exactly by the threat of the next Houthi missile.
Summary:
- Brent settled just above $100 a barrel and WTI near $89.50, both roughly unchanged after two-way trade
- Saudi Arabia says East-West Pipeline flows to Yanbu are back near 6 million bpd, against capacity of about 7 million, around five days after the line was hit
- Vitol’s chief executive says about 12 million bpd of crude and 2 million bpd of products left the Middle East over the past week to 10 days
- G7 agreed to release 100 million barrels of diesel and crude from emergency reserves, with the IEA meeting next week on the details
- Houthi attacks on Saudi airports, a reported explosion on Iran’s Qeshm Island and a likely Gulf of Mexico cyclone kept a floor under prices
- Analysts expect a US crude build of close to 2 million barrels, with EIA data due Wednesday at 10:30 am ET (14:30 GMT)
Oil prices finished Tuesday close to where they started, with Brent settling just above $100 a barrel and US West Texas Intermediate holding near $89.50. The market balanced three competing forces: recovering Middle East supply, a coordinated release of emergency stocks, and the persistent risk of fresh disruption.
The first force is the return of Saudi export capacity. Saudi Energy Minister Prince Abdulaziz bin Salman said flows through the East-West Pipeline, which carries crude to the Red Sea export hub of Yanbu, had reached close to 6 million barrels per day against capacity of around 7 million, Al Hadath reported. Operations resumed about five days after the line was hit. Argus later reported that three of the pipeline’s 11 pumping stations were damaged but the pipeline itself was intact. More broadly, the chief executive of commodity trader Vitol said around 12 million bpd of crude and 2 million bpd of refined products had left the Middle East by tanker over the past week to 10 days, volumes he said were needed to ease price pressure.
The second force is policy. Under pressure from US President Donald Trump, the Group of Seven agreed on Friday to release 100 million barrels of diesel and crude from emergency reserves and to refrain from energy export restrictions. The International Energy Agency will meet next week to settle the details of the diesel release, Reuters reported, amid confusion over how much Europe and the US will contribute. Diesel, which underpins trucking, farming and industry, is at record highs after the wars in Iran and Ukraine curtailed exports and damaged refineries.
The third force kept a floor under prices. Saudi authorities said airports in Jazan and Najran were targeted in two attacks on Monday evening, injuring three people and causing limited damage, as fighting between the kingdom and Yemen’s Iran-backed Houthis escalated. US crude briefly turned positive on Tuesday after reports that the Houthis had fired a ballistic missile at Saudi Arabia. Late in the session, an explosion was reported on Iran’s Qeshm Island. On the diplomatic track, Qatar said US and Iranian officials remained engaged in talks, and an Iranian minister described discussions with the Emir of Qatar as constructive.
Beyond the Gulf, Ukrainian President Volodymyr Zelenskiy said intelligence pointed to Russia preparing a major attack. The US National Hurricane Center put the chance of a cyclone forming in the Gulf of Mexico within seven days at 100%, a direct risk to offshore production and coastal refining.
The longer view remains tight. The US Energy Information Administration projected on Tuesday that world petroleum output will fall from a record of about 106 million bpd in 2025 to about 101 million bpd this year, with demand slipping from roughly 104 million to about 102 million bpd. It expects both to recover to record highs in 2027.
Attention now turns to US inventories. Analysts expect a crude build of close to 2 million barrels for the week to 2 October, which would mark three straight weekly increases for the first time since August. The EIA’s official figures are due on Wednesday at 10:30 am ET (14:30 GMT).
This article was written by Eamonn Sheridan at investinglive.com.