Highlights:

• Saudi pipeline capacity may return sooner, testing oil’s geopolitical risk premium.
• Brent slides below US$106 as traders reassess prolonged supply disruption risks.
• Hormuz uncertainty remains, leaving crude vulnerable to another volatility surge.

Saudi Pipeline Recovery

Oil prices extended their decline as expectations of a faster restoration of Saudi Arabia’s critical East-West Pipeline reduced fears of a prolonged supply squeeze. Brent crude was trading near US$105.80 per barrel, down 2.69%, while West Texas Intermediate (WTI) crude slipped to around US$101.90, down 0.50%.

Saudi Aramco is said to be rerouting crude flows around the damaged section of the approximately 1,200-kilometre pipeline, which could allow nearly half of the lost capacity to return within days. Full operations could return in approximately six weeks.

Saudi Supply Route Moves Closer to Recovery

The East-West Pipeline has become strategically important because it allows Saudi crude to reach the Red Sea coast without relying on the Strait of Hormuz. Before the latest disruption, the route had been moving roughly 4–5 million barrels per day, equivalent to around 4%–5% of global oil supply.

The pipeline was damaged following attacks last week, temporarily restricting shipments through the Yanbu export hub. Saudi Arabia has turned to alternative export routes, using ship-to-ship transfers near Oman’s Sohar port to increase crude supplies to Asian refiners.

Oil Market Focus Shifts Back to Supply Availability

The improving pipeline outlook has removed part of the immediate scarcity premium that recently pushed Brent above US$108 per barrel. However, geopolitical risks have not disappeared. Shipping through the Strait of Hormuz remains constrained, while disruptions across major Middle Eastern export routes continue to complicate global crude flows.

US petroleum data are also influencing sentiment. Official figures showed crude inventories falling by 600,000 barrels to 423.4 million barrels, although gasoline and distillate stocks increased.

What Comes Next for Oil Prices?

Near-term direction will likely depend on how quickly Saudi Arabia restores pipeline throughput and whether alternative export routes remain operational. A smooth recovery could further reduce supply anxiety and pressure crude prices. Conversely, renewed attacks, shipping interruptions or slower-than-expected repairs could rapidly rebuild the geopolitical premium, keeping Brent and WTI volatile.

Note- All data presented is based on information available at the time of writing.

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