Brent Slides Below $97 as Saudi 4M bpd Pipeline Returns

Energy traders and macro investors got a temporary reprieve when Saudi Arabia restarted its key East-West pipeline on September 22, easing the most acute physical supply scare from an 11-day outage that idled about 4% of global crude supply. Brent quickly slid more than $2 toward $97, the lowest since September 8, as the market priced the return of Yanbu loadings. Yet with three of 11 pumping stations damaged and full restoration six to eight weeks away, the bearish impulse is capped by lingering strike and rerouting risk.

After an 11-day outage caused by a drone attack, Saudi Arabia has restarted its East-West oil pipeline, restoring a critical route that had been moving roughly 4 million barrels per day, equivalent to about 4 percent of global supply. Three sources briefed on the matter said the line was pumping at a low rate on September 22 and that crude exports from the Red Sea port of Yanbu could resume later that day. State oil company Saudi Aramco, which operates the 7 million bpd system, did not immediately respond to a request for comment. Two sources said Aramco was focused on bringing the pumping rate back to 4 million bpd, while a security source cautioned that reaching 40 percent of capacity would take a couple of days and a full restart would require six to eight weeks.

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Brent crude fell by more than $2 a barrel toward $97, its lowest level since September 8, as traders anticipated the return of physical barrels from Yanbu.

The pipeline is one of the most important pieces of energy infrastructure in the Middle East. It connects Saudi Arabia's Gulf coast oil fields to the Red Sea, allowing the kingdom to bypass the Strait of Hormuz, the narrow waterway that has been under severe strain since the U.S.-Israeli war on Iran disrupted oil flows from Saudi Arabia and other regional producers. Saudi Arabia blamed the September 11 drone strike on Iraqi militia. Satellite imagery and industry sources identified damage at three of the pipeline's 11 pumping stations; the line also has two separate pressure relief stations. That physical damage is the main reason the restoration is incremental rather than immediate.

The restart had an immediate and visible effect on oil pricing. Brent crude fell by more than $2 a barrel toward $97, its lowest level since September 8, as traders anticipated the return of physical barrels from Yanbu. The decline was notable because it partially unwound the geopolitical and supply-risk premium that had accumulated during the shutdown. Yet the move was not a full capitulation. With full pumping capacity still weeks away, and with the Strait of Hormuz rerouting dynamic still active, the market is pricing in partial normalization rather than a complete resolution of the supply disruption.