Brent crude spiked to $108.49 per barrel at the Asian opening while WTI reached $106.60 per barrel, before easing back a bit, after Saudi Arabia closed its East-West pipeline following attacks, Saxo Bank noted in a market quick take posted on its site early Monday.
The route has been carrying around five million barrels a day of crude bypassing the Strait of Hormuz, Saxo Bank pointed out in the quick take, adding that the closure is estimated to put around four percent of global supply at risk and may force Saudi Arabia to make further output cuts as storage facilities fill.
“With no end to the conflict in sight, the risk of further inflationary pressure through higher fuel costs remains a key focus,” Saxo Bank warned in the market quick take.
“In Brent, the prompt month spread has jumped to $5.39 while the three-month spread has surged to near $14 highlighting the elevated premiums buyers are prepared to pay for immediate delivery,” it added.
In a market analysis sent to Rigzone today, Waleed Said, Technical Analyst at GivTrade, outlined that both Bent and WTI advanced more than three percent “as renewed attacks disrupted critical Middle East energy infrastructure and shipping routes”.
“That move reversed part of Friday’s pullback, when Brent settled at $$104.61 and WTI at $100.05 as expectations for possible diplomatic progress temporarily reduced the geopolitical premium,” Said noted.
The Technical Analyst went on to state that the current oil market looks driven less by ordinary changes in consumption and more by the physical availability and transportability of crude.
“A major Saudi pipeline capable of bypassing the Strait of Hormuz has been shut, placing roughly four of global supply at potential risk while shipping through Hormuz remains heavily constrained,” Said highlighted in the analysis.
“This keeps an unusually large geopolitical premium embedded in crude prices and explains why oil remains above $100 even as tighter monetary policy threatens global demand,” he added.
Said also noted that U.S. President Donald Trump’s latest comments create two competing forces for the oil ecosystem.
“His position that Iran cannot obtain a nuclear weapon and that economic pressure is tightening reinforces the geopolitical risk premium surrounding Gulf production, tankers, and strategic shipping routes,” Said noted.
“At the same time, his demand that attacks on Russian diesel infrastructure stop because they are ‘hurting the world’ signals concern about the tightening global refined-products market,” he added.
“If those comments are followed by fewer refinery disruptions, greater Russian diesel availability, or meaningful progress toward de-escalation, part of the current supply premium could leave both crude and diesel prices,” he continued.
“If tensions involving Iran, Hormuz or Russian fuel infrastructure worsen, however, traders could continue pricing the possibility that even more barrels become unavailable,” he warned.
Said went on to note that the latest OPEC+ position of holding October required production at September levels “provides no immediate additional supply cushion, while current global supply projections point to approximately 100.7 million barrels per day in 2026, down 5.7 million barrels per day year over year, with observed inventories already falling by about 507 million barrels since February”.
Said outlined in the analysis that recent U.S. economic releases are simultaneously creating a bearish demand mechanism beneath the bullish supply story.
“August headline CPI increased 0.4 percent month over month and 3.4 percent year over year, while core CPI rose 0.3 percent month over month and 2.4 percent year over year,” he said.
“Final-demand PPI advanced 0.4 percent month over month and 5.4 percent year over year, while consumer sentiment deteriorated to 47.8 from 51.7 and one-year inflation expectations increased to 4.6 percent,” he added.
“Those actual figures have strengthened expectations for a 25-basis-point interest-rate increase this week, with market-implied probability around 86 percent,” he continued.
“For oil, this creates an important feedback loop: higher crude and diesel prices can keep inflation elevated, higher inflation can produce tighter interest rates, and tighter financial conditions can eventually weaken transport, manufacturing, household spending and fuel consumption,” he highlighted.
“That is why oil can rally sharply on supply disruption while still carrying a growing medium-term demand-destruction risk,” he noted.
Today brings no major U.S. economic release capable of immediately replacing geopolitics as the dominant oil catalyst, according to Said. The Technical Analyst at GivTrade did state, however, that China’s pending credit indicators remain important for assessing future demand.
In market commentary sent to Rigzone today by the Sparta Commodities team, Aaron Kildow, Crude Commodity Owner at Sparta, said “the rekindling of hostilities between Iran and the U.S. at the beginning of September has now expanded markedly this past week” and projected that the attack on Saudi’s East-West pipeline may take up to a month to repair.
“We think the flat-price market will continue to march higher in the very near future,” Kildow highlighted in the commentary, adding that the Brent futures market “will likely continue to lead the market higher”.
A statement posted on the official X page of Saudi Arabia’s Ministry of Energy on Friday noted that “an official source at the Ministry of Energy stated that the East-West Pipeline in the Riyadh and Madinah regions was subjected to multiple attacks on the morning of Thursday, 10 September 2026”.
“The pipeline was shut down as a precautionary measure. The attacks resulted in a number of injuries, and medical care was provided to those affected,” the statement added.
“The source said emergency and specialized technical teams responded immediately following the attacks, taking the necessary measures to secure the pipeline and assess its safety in line with approved safety procedures and emergency response plans, in coordination with the relevant authorities,” it continued.
In a BMI report sent to Rigzone by the Fitch Group on Friday, analysts at BMI, a unit of Fitch Solutions, noted that Brent crude had faced continued upward pressure last week, “amid tightening physical market fundamentals and fading optimism for a U.S.-Iran peace deal”.
“Brent futures rose 5.8 percent w-o-w, to close at $101.2 per barrel on September 9, while Dated Brent rose 16.3 percent, to close at $114.5 per barrel,” the analysts pointed out.
“The physical market is signaling acute tightness: regional benchmarks Murban ($116 per barrel) and Oman ($121 per barrel) are both trading above Dated Brent, the spread between physical and paper barrels has widened and backwardation in the futures curve has steepened,” they added.
Pressures are more acute downstream, the analysts highlighted, adding that diesel cracks were breaking record highs in both Europe and the U.S. and that U.S. diesel prices were rising above $200 per barrel on September 9, “raising the specter of fuel shortages next quarter”.
The BMI analysts revealed in the report that BMI’s Country Risk team had cut the probability of a preliminary U.S.-Iran deal being reached in the third quarter from 50 percent to 40 percent, “with rising tensions across multiple theatres placing Gulf oil supply at risk”.
“Tanker tracking data point to August flows of around 15 million barrels per day of crude and fuels, roughly two-thirds of the 25 million barrel per day pre-conflict norm, though U.S. officials indicate volumes closer to normal,” the analysts said.
“Russian seaborne crude exports have also fallen by around 1.2 million barrels per day from their late-June peaks,” they added.
The BMI analysts went on to warn that “offsetting levers are thinning, with inventories depleted, spare capacity stretched, and Asian refinery runs recovering from Q2 lows”.
“We hold to our forecast for Dated Brent to average $86 per barrel in 2026 and $71 per barrel in 2027”, they added.
“But risks are skewing increasingly to the upside; absent a Q3 deal, we will make a sizable upward revision at end-September,” they revealed.
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