Brent Holds Above $102 as Saudi East-West Pipeline Restart Offsets Hormuz Risk Premium
Brent crude traded near $102 a barrel on 24 September as traders balanced a partial restart of Saudi Arabia's East-West Pipeline against unresolved Iranian conditions for reopening the Strait of Hormuz, while a US crude stock build masked a continued drawdown in distillate inventories to roughly 12% below the five-year average.
US inventory data released on Wednesday showed commercial crude stockpiles rising 3 million barrels to 426.4 million barrels in the week ending 18 September, leaving inventories about 2% above the five-year seasonal average. Gasoline stocks fell 1.7 million barrels and distillates fell a further 400,000 barrels, putting distillate supplies roughly 12% below the five-year norm. Total products supplied, the EIA's demand proxy, averaged 20.6 million barrels per day over the last four weeks, up 0.5% year on year, with gasoline demand at 8.8 million bpd and distillate at 3.6 million bpd. The build was therefore concentrated at the front of the barrel while product balances tightened.
The pipeline outage matters more than usual because the global routing system has already been rewritten. EIA figures show oil flows through Hormuz falling from 21.6 million bpd in the fourth quarter of 2025 to just 4.9 million bpd in the second quarter of 2026, while flows through Bab el-Mandeb rose from 5.4 million to 8.1 million bpd over the same period. The East-West Pipeline had been moving roughly 4 million bpd to the Red Sea port of Yanbu, about 4% of global supply, before drone strikes shut it. Reuters reported that available inventories at Yanbu may cover only five to seven days of exports at recent rates, with one industry source putting full restoration at five to six weeks, and Saudi output already fell to about 6.2 million bpd in August from 10.9 million bpd in February.
Price action reflects a market that keeps repricing the same two variables. Benchmarks posted six consecutive daily losses before a 4% gain on Wednesday, with Brent at $102.20 and WTI at $91.43 at the time of writing on 24 September. Brent had settled at $104.61 with WTI at $100.05 in the week to 18 September, both up more than 8% on the week, before easing on hopes of US-Iran diplomacy at the UN General Assembly. ING noted benchmarks remain about 60% higher year to date. Iran has conditioned reopening Hormuz on lifting the naval blockade, ending sanctions and unfreezing assets, none of which Washington has accepted, so the supply risk premium stays embedded in the curve.