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EMEA Oil Update: Oil Prices Ease from Multi-Month Highs

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Oil prices eased on Wednesday after hitting its highest since May in the previous day as data from American Petroleum Institute showed a rise in US inventory, while ongoing Middle East conflicts and pipeline outages in Saudi Arabia keep traders on edge.

Brent crude futures eased 0.9% to $107.82 per barrel, while Dubai 1st Line Futures slipped 0.5% to $97.66/bbl. Both contracts hit their highest since mid-May on Tuesday.

"Prices have eased this morning as some risk premium unwinds after the API reported a weekly rise in US crude and fuel stockpiles, while data showed flows through the Strait of Hormuz rising to their highest since June/July," Saxo Bank analysts said.

Data from the API revealed Tuesday that US crude oil inventories increased by 7.14 million barrels in the week ended Sept. 11.

The oil market now awaits the US Energy Information Administration's petroleum inventory report, scheduled for release on Wednesday.

However, underlying supply vulnerabilities persist across the Middle East.

Saudi Arabia reportedly canceled September crude cargoes to European buyers and suspended Yanbu loadings following drone attacks on its East-West pipeline, forcing the OPEC leader to reroute shipments through the Gulf of Oman.

However, Kpler noted that Saudi Arabia is shifting more crude loadings to Gulf ports as Yanbu constraints grow, increasing exposure to the Strait of Hormuz.

Compounding these pressures, Iranian crude exports have plummeted to roughly 210,000 barrels per day in August due to ongoing blockades, down sharply from 2 million barrels per day earlier in the year.

Iran's oil exports have collapsed as the Hormuz blockade disrupts tanker flows, drains China's supply buffer and complicates any recovery, Claire Jungman, Director of Maritime Risk and Intelligence at Vortexa, said in a Tuesday note.

Meanwhile, additional supply concerns loom from a potential force majeure on deliveries tied to an attack on Libya's Hamada-Zawiya pipeline.

"It does feel like an environment where oil prices want to take another leg higher," Kpler noted.

What else is happening in Oil & Energy?

Oil & Energy

US Oil Update: Crude Rises as Saudi Pipeline Outage, Russia Attacks Raise Supply Risks

Crude futures settled higher in after-hours trading on Tuesday as an ongoing outage on Saudi Arabia's critical East-West pipeline and persistent attacks on Russian energy infrastructure heightened global supply fears.Front-month West Texas Intermediate futures rallied 4.03% to $105.94 per barrel, while Brent futures advanced 2.% to $108.68/bbl.Gelber & Associates strategists said that October WTI trades at $103.31/bbl, up $1.92 or 1.9%, as uncertainty surrounding Saudi Arabia's damaged East-West Pipeline sustains a substantial supply premium.US Energy Secretary Chris Wright reportedly said that Saudi Arabia's critical East-West crude oil pipeline will start operating again "very soon" after Iran-backed attacks forced its closure.Saudi Arabia has halted oil loadings at its Red Sea port of Yanbu, and the country has informed European customers that some late-September crude cargoes would be canceled, according to media reports.The Gulf state issued security alerts over a range of territory, including Mecca and Jeddah, on Tuesday. The Saudi Arabian Civil Defense later lifted the alerts, saying the danger had passed in Jeddah, Abha, Jazan, AlUla and Taif amid an uptick in attacks by the Houthis.The latest strikes followed a Houthi attack on Saudi Arabia's East-West Pipeline on Friday that forced the Gulf state to shut the vital export route.Kpler strategists said that damage to Saudi Arabia's East-West Pipeline has shifted the oil market's focus to export logistics, with the key question now being how quickly the Gulf state can restore flows and reroute crude.Kpler's base case assumes the East-West Pipeline, dubbed Petroline, will return at about 50% of its pre-attack capacity after repairs that could take as long as six weeks. The consultancy said that could reduce exports from the Red Sea port of Yanbu by about 2.5 million to 2.7 million barrels per day.Meanwhile, Ukraine said on Tuesday it hit the Syzran refinery in Russia's Volga region overnight, as Kyiv's attacks on refineries in Russia have helped drive diesel prices to record highs.The attacks came after the two sides welcomed a potential energy truce floated by President Trump. Ukrainian President Volodymyr Zelenskyy proposed that his country's partners secure an agreement with Russia to stop the destruction of critical infrastructure.Dan Bunkering strategists said that Ukrainian attacks have reduced Russian refinery output and product availability, and there is little reason to assume this pressure will disappear.On the supply front, ING strategists said growing tightness in diesel markets, including in the US, has raised speculation about possible US export controls on crude oil and refined products.ING strategists said that the Trump administration has pushed back against the idea, arguing that an export ban would do little to bring down prices.Though restricting refined-product exports could provide some near-term price relief, the analysts said it would also pressure refinery margins and could eventually prompt refiners to cut processing rates, tightening supplies and pushing prices higher over the longer term.

Oil & Energy

Market Chatter: Vance Says US-Iran War Could End After Midterms as Conflict Enters New Phase

The US conflict with Iran could enter a much different phase in a couple of months, Vice President J D Vance told the New York Post Tuesday, while agreeing that the war could end after the midterms.Vance said Iran's control over the Strait of Hormuz would continue to weaken ahead of the election, with the key energy route now carrying over 50% of normal traffic.He said the timeline remains uncertain but noted that President Donald Trump will decide when the conflict starts and ends.Vance also acknowledged public impatience over the prolonged conflict, while saying the US currently has no aggressive operations underway against Iran. Iranian forces have instead occasionally fired on commercial shipping, although Vance said those attacks have generally failed to hit their targets.The White House did not immediately reply to' request for comment.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Oil & Energy

Market Chatter: Saudi Arabia Cancels September Crude Cargoes, Suspends Yanbu Loadings

Saudi Arabia has canceled some September crude cargoes to European customers and suspended Yanbu loadings after drone attacks damaged its East-West pipeline, Reuters reported Tuesday, citing traders and shipping sources.The pipeline shutdown followed attacks that Riyadh attributed to Iraqi militias, while European buyers, including Poland, moved to secure alternative crude supplies.Physical oil prices in Europe rose above $130 per barrel Tuesday as buyers sought alternatives to disrupted Middle East supplies amid intensifying regional conflict. North Sea Forties crude surged to $136.75/bbl, putting it within reach of the $147.37 record set April 13, the report added, citing LSEG data.The loss of Red Sea flows could push Saudi Arabia to use dark shipments through the Strait of Hormuz, with Gulf producers currently moving 7 million barrels per day to 9 million b/d, the report said.Saudi Aramco did not immediately reply to' request for comment.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)