After Saudi Pipeline Attack, Gulf Exports Expand as Seven Super Tankers Load 14 Million Barrels; Brent Crude Breaks $100 Intraday, WTI Drops Over 6%

Saudi Aramco restructured its crude oil export routes at a pace that exceeded market expectations, causing the supply disruption premium that had accumulated after the recent pipeline attack to rapidly dissipate. International crude oil futures were under pressure and accelerated their decline on Monday, with Brent oil temporarily dropping below the $100 mark.

According to data from TankerTrackers.com, on Sunday, Saudi Aramco loaded about 14 million barrels of crude oil onto seven Very Large Crude Carriers (VLCCs) in the Middle East Gulf region. Media reports noted that satellite images showed these tankers were anchored near the Ras Tanura port. This scale of loading strongly signals the partial restoration of Saudi exports, directly dampening bullish sentiment in the oil market and beginning to reprice for Saudi's rapid export recovery.

On Monday, September 21 (Eastern time), Brent crude oil futures closed down $3.53, a decline of 3.4%, at $100.34 per barrel. During U.S. trading hours, it fell below the $100 mark for the first time since September 9; U.S. WTI October crude oil closed down 4.51%, at $95.78 per barrel. Both Brent and WTI closed at their lowest since September 8, with intraday lows reaching $94.22, and the daily loss expanded to more than 6%.

By Monday’s close, both Brent and WTI had fallen for four consecutive trading days, the longest losing streak since June 16 and June 24, respectively, with four-day cumulative drops of 7.73% and 9.5%.

Meanwhile, market anticipation for progress in U.S.-Iran diplomacy also increased, further reducing the geopolitical risk premium. Trump stated he was willing to meet Iranian President Masoud Pezeshkian, who will attend the United Nations General Assembly this week. PVM Oil Associates analyst Tamas Varga said that investors are pinning their hopes on a breakthrough in negotiations this week.

Loaded Volume Surpasses Expectations, Export Routes Rapidly Restructured

On September 13, drone attacks forced Saudi Arabia to shut down its east-west oil pipeline, and crude oil loading operations at the Red Sea coastal Yanbu oil port were completely halted. However, Saudi Aramco managed to complete a massive switch of export routes in less than a week—a pace that surpassed the expectations of some market participants.

According to Reuters citing Vortexa data, since September 12, crude oil loadings through Gulf routes have averaged about 3.7 million barrels per day, up from 2.9 million barrels per day earlier this month; from September 1 to 11, average Red Sea loadings were about 3.9 million barrels per day.

JPMorgan analysts stated in a report last Friday that satellite data shows Saudi crude flows through the Strait of Hormuz averaged 2.9 million barrels per day in the past six days, compared to only 700,000 barrels per day in August.

The roughly 14 million barrels loaded in one day on Sunday further proves Saudi's ability to quickly shift the export focus to Gulf ports and indicates that the duration of this supply disruption may be shorter than the market’s most pessimistic expectations.

Oil Price Drop: Disappearance of Geopolitical Premium Coupled with Diplomatic Expectations

Brent crude briefly fell below $100, reflecting two forces at play: first, the improved supply outlook from partial restoration of Saudi exports; and second, reversal of geopolitical risk premium as the U.S.-Iran diplomatic window reopened.

Bob Yawger, Director of Energy Futures at Mizuho, noted that just a few days earlier, a U.S.-Iran meeting seemed extremely unlikely, "This is a step in the right direction." According to Al Jazeera, Iran has conveyed its conditions for resuming talks through mediators, and Iranian security chief Mohsen Rezaei has confirmed this.

It is worth noting that actual conflicts in the Middle East have not stopped. Yemeni Houthi forces claim to have launched attacks on Saudi Aramco facilities in Riyadh and the Red Sea city Yanbu, and to be continuing military operations along the Red Sea coast.

A report on Thursday, September 17, cited Iranian sources stating that after a request from Saudi Arabia, a major power has asked Iran to help restrain the Houthis. Geopolitical uncertainty remains, but the market’s current pricing focus has shifted from risk premiums to expectations of supply restoration.

Sales Strategy Shifts East, Asian Refineries Benefit, European Supplies Tighten

Following the pipeline disruption, Saudi Aramco made a clear adjustment to its sales strategy: canceling some crude oil sales to European customers, and increasing sales loaded at eastern ports via the Strait of Hormuz for the Asian market.

According to media reports last week quoting trading sources, Saudi Arabia will sell about 60 million barrels of crude from Ras Tanura port this and next month, with deliveries completed via ship-to-ship transfers at Oman’s Sohar port. This means Asian refineries will have more Saudi crude supply, while European buyers will face a temporary supply squeeze, forcing them to look for alternative sources or bear spot market premiums.

For Asian refineries, the arrival of additional Saudi supply coincides with a retreat in oil prices, easing procurement cost pressures; however, ship-to-ship transfer delivery methods mean logistics are more complicated and there is some uncertainty about arrival times.

Upcoming Risks: Pipeline Repair Progress and Export Sustainability Remain Uncertain

Although current export data shows a recovery in Saudi supply, the market still needs to be alert to reverse risks. There is no clear timetable for the repair of the east-west pipeline, and a Saudi Aramco spokesperson declined to comment. If pipeline repairs lag behind expectations, or the Houthis launch a new round of attacks on Gulf export facilities, the current reliance on the Strait of Hormuz for exports will face greater pressure.

In addition, Libya is also sending signals of supply disruption. National Oil Corporation chairman Massoud Suleman told Reuters on Monday that the country’s Sharara oil field has experienced a partial output decline, though the exact reason was not provided, adding another variable to global supply.

The current oil price retreat to some extent reflects market optimism over Saudi export recovery. If actual export data fails to consistently deliver, or geopolitical tension rises again, oil prices may rebound. The actual progress of pipeline repairs and the sustainability of exports via the Strait of Hormuz will be key indicators for future market pricing.