September 16th, news:
On Tuesday, September 15, international crude oil futures surged sharply, driven by news of an attack on Saudi Arabia's crude oil export infrastructure. The price increase for WTI crude oil significantly exceeded that of Brent crude oil.
I. Market Performance
September 15, 14:30 New York time (September 16, 02:30 Beijing time): NYMEX October WTI crude oil futures rose by $4.44, a price increase of 4.38%, with the settlement price at $105.83 per barrel. During the session, prices reached a high of $106.75 per barrel, the highest level since May 4. ICE November Brent crude oil futures rose by $3.07, a price increase of 2.90%, with the settlement price at $108.75 per barrel.
Refined oil prices rise in tandem, driving a broad-based rally in the energy sector:
November heating oil (U.S. fuel oil): up 25.47 cents, a price increase of 5.36%, closing at $5.0100 per gallon;
November RBOB gasoline: rose by 10.90 cents, with a price increase of 3.47%, closing at $3.2464 per gallon; October natural gas futures edged higher, rising by 2.3 cents, representing a price increase of 0.79%, and closing at $2.919 per million British thermal units.
II. Trend Analysis:
Key Factor: Saudi East-West Oil Pipeline Attacked, Putting Pressure on Red Sea Exports
Since the U.S. and Israel joined forces to provoke conflict with Iran and navigation through the Strait of Hormuz became restricted, Saudi Arabia’s east-west oil pipeline combined with the Yanbu port has become the country’s lifeline for transporting crude oil to Europe while bypassing the Strait of Hormuz. This pipeline, which stretches approximately 1,200 kilometers in total, carries crude oil from eastern oilfields to the Red Sea port of Yanbu, playing a crucial role as an alternative export route. Should this pipeline be shut down, it would directly affect about 4% of the world’s crude oil supply.
Last Friday, the Houthi forces attacked Saudi Arabia's east-west oil pipeline, forcing its closure. The situation continued to escalate: shipping reports indicated that crude oil loading operations at the Red Sea port of Yanbu were suspended; market estimates suggest that the existing inventory in Yanbu can only sustain about 5 days of exports. Saudi Arabia notified several European refineries to cancel or postpone crude oil deliveries scheduled for late September, with at least three European refineries having their late September shipments canceled or delayed until November. Multiple refineries may receive notices of supply reductions, and Saudi crude oil shipments scheduled for the last 10 days of September are at risk of delivery issues.
Market expectations suggest that European refineries will have to turn to U.S. crude oil as an alternative source of supply, leading to a concentrated influx of buying interest in WTI as an alternative benchmark. As a result, the WTI price has risen more sharply than Brent. Market participants pointed out that Saudi Arabia’s cancellation of shipments to Europe has reinforced expectations of increased European purchases of U.S. crude oil, thereby driving up the price spread between WTI and Brent.
The market has widely differing expectations regarding the pipeline repair timeline: While the U.S. Energy Secretary indicated that the pipeline could be restored within a few days, Goldman Sachs estimates that the repair period could range significantly—from a short-term fix to as long as eight weeks. Goldman Sachs warns that attacks on oil infrastructure represent a significant escalation of the conflict, and Brent crude oil could potentially break through the $120 per barrel mark. In an extreme scenario, crude oil production in the Gulf region could fall by 4 million barrels per day by 2027 compared to pre-conflict levels.
In terms of shipping lanes, preliminary data from Kpler show that on Monday, the number of commodity vessels passing through the Strait of Hormuz further declined to just four, down from 10 the previous day, signaling that shipping risks in the strait continue to escalate. Sources indicate that a new round of sanctions is reshaping market expectations regarding the intensity and duration of the conflict.
Libyan oil fields unexpectedly shut down, increasing global supply pressure.
In addition to the geopolitical shocks in the Middle East, Libya has experienced a supply disruption that is independent of the regional conflict. According to a statement from Libya’s National Oil Corporation, protesters from the oil facility guards have shut down valves on the Hamada-Zawiyah crude oil export pipeline, directly causing three oil fields to halt production. The guards have threatened that if their demands are not met, they will continue to expand the scope of the production stoppages. Libya’s NOC stated that if the valves remain closed, it may declare force majeure on crude oil supplies, adding a new risk factor to the global crude oil supply.
Ukrainian and Russian Attacks on Energy Facilities Exacerbate Tightening Supply of Refined Petroleum Products
Europe and Ukraine/Russia continue to face ongoing attacks on energy infrastructure, fueling growing concerns about tightening diesel supplies and driving U.S. diesel futures and the diesel crack spread to all-time highs.
On September 14, local time, Trump announced that Russia and Ukraine had agreed not to attack each other's energy facilities. However, the Ukrainian side set a precondition: Russia must first cease its attacks on energy facilities. On the 15th, Russia merely expressed welcome for the proposal, but no substantive agreement was reached between the two sides. As a result, the risk to energy facility security remains unresolved, continuing to support the strong performance of diesel prices.
3. Outlook for the Future Market
Crude oil analysts believe that the core logic behind crude oil pricing has shifted away from supply-and-demand fundamentals and toward the trading logic driven by geopolitical conflicts in the Middle East. Currently, the central contradiction revolves around the pace of repair work on Saudi Arabia’s east-west oil pipelines. If the pipelines are quickly repaired and the Yanbu port resumes loading operations, risk aversion in the market will ease, creating room for oil prices to pull back. However, should the pipeline repair process drag on and shipping through the Red Sea remain disrupted, oil prices could continue to surge. Overall, the oil market faces heightened risks in the near term, with a greater likelihood of wide-ranging price swings. Investors should therefore approach future market developments with caution.
