Brent Slides Below $105 as Aramco Races to Restart East-West Pipeline
Brent crude retreated from a four-month high near $108 after Saudi Aramco said it could restore roughly half of the East-West pipeline's capacity within days, even as EIA data showed global oil inventories down about 400 million barrels since January and US distillate stocks heading below 100 million barrels.
Brent crude fell 2.7% to settle at $105.83 a barrel on Wednesday 16 September, with WTI down 3.2% at $102.43, the largest single-day drop since early August. The reversal followed reports that Saudi Aramco is building a bypass around the damaged section of the 1,200-kilometre East-West pipeline and aims to restore about half of its throughput within days, with a full return to service expected in roughly six weeks. Two pumping stations were hit in the attack that shut the line, which carries crude from the eastern fields to the Red Sea terminal at Yanbu and has a nameplate capacity of about 7 million barrels per day. Before the outage the line had been moving an estimated 4 million to 5 million barrels per day, equal to roughly 4% to 5% of global supply.
The pullback does not resolve the underlying deficit. The US Energy Information Administration's September Short-Term Energy Outlook, released on 9 September, forecast Brent averaging around $90 a barrel in the second half of 2026 after an August average of $91, and put global oil inventories down roughly 400 million barrels so far this year. The agency expects Middle East crude production to stay below pre-conflict averages until the second quarter of 2027 as export constraints persist. On the products side, EIA forecast US distillate fuel oil inventories falling below 100 million barrels in September and staying under the five-year low through much of 2027, keeping diesel cracks wide.
Physical indicators remain tight even with the repair underway. Aramco exported about 3 million barrels a day in August, the lowest in roughly nine years, and shipped around 20 million barrels to Asian refiners this week for September and October loading while European buyers such as Poland's Orlen sourced replacement cargoes elsewhere. Strait of Hormuz transits were running at roughly a tenth of pre-war levels, with preliminary shipping data showing only four visible vessel passages on Tuesday against a ten-day average of eighteen. US commercial crude stocks fell 640,000 barrels to 423.4 million in the week to 11 September, a third straight weekly draw but smaller than expected, while gasoline and distillate stocks both built.
Pricing now hinges on execution rather than announcements. Research house HLIB raised its 2026 Brent assumption to $90 a barrel from $80 and warned prices could revisit $120 if Hormuz and Bab-el-Mandeb disruptions deepen simultaneously, noting the global deficit widened to about 4.1 million barrels a day in August from 0.1 million in July. The United Nations General Assembly debate opens on 22 September with Gulf foreign ministers expected to meet US counterparts, adding an event risk around the same window. Traders are treating the 'within days' and 'six weeks' repair windows as two separate tests of whether barrels actually reach loading terminals.