Brent crude changed hands at $100.41 a barrel on Wednesday morning, $1.16 firmer on the day. The bounce breaks a run of six losing sessions. Brent had closed at $108.75 on September 15, and by Tuesday it was down to $97.75, a level it had not touched since September 8. WTI sat at $91.12.
Two things pulled the premium out of the price: crude started moving through a Saudi pipeline again, and American and Iranian officials spent an afternoon in a room together in New York.
Aramco gets the Yanbu route back
Saudi Aramco brought its East-West Pipeline back online on Tuesday, about twelve days after drones flown from Iraq hit one of its pumping stations on September 10. Three of the eleven stations along the route took damage.
The line matters more than it usually would. It can carry 7 million barrels a day. Roughly 2 million of that feeds refineries on the kingdom's western side, which leaves something like 5 million for loading at Yanbu on the Red Sea coast. Because the Strait of Hormuz has barely functioned all year, Riyadh has leaned on the pipeline for close to 4 million barrels a day, a volume equal to about one barrel in every twenty-five the world burns.
The restart was cautious. People briefed on the repair work told Reuters the line should reach two fifths of its design rate within a couple of days, while a return to its usual throughput is likely six to eight weeks off. Bloomberg reported that Aramco wants volumes the market would actually notice by Saturday. One cargo was booked to load at Yanbu on Tuesday for a buyer in China, and refiners across Asia have been told, with no formal announcement, that the port is about to start supplying them again.
That matters to a market which had stopped counting on those barrels. Saudi shipments slid to around 3 million barrels a day in August, the kingdom's weakest month in nine years, and European buyers were already being warned to plan for trimmed October volumes.
An afternoon in New York
Steve Witkoff and Jared Kushner, the two men running Washington's Iran file, met Iranian representatives on the sidelines of the UN General Assembly on Tuesday. President Trump said the session ran three hours. "They had a very good meeting, a very productive meeting," he told reporters, and said there is "a lot of momentum for them to make a deal." A follow-up is planned, with no date set. Iran's foreign minister, Abbas Araghchi, was there for the Iranian side.
Reuters and Kyodo separately reported terms from a senior Iranian official for reopening the Strait of Hormuz. Seven days is all it would take, the official said, provided the Americans dial back the military squeeze and stop choking off traffic to Iranian ports. The offer reportedly reached Washington through mediators on September 16.
"The US needs to announce that it wants to resolve the issue diplomatically, make that official, and then agree on a timeline for how the process will move forward."
Traders bought the story. It deserved more caution than they gave it. A different senior Iranian official told MS Now, a CNBC partner outlet, that the Reuters and Kyodo accounts were false. Iran's president, Masoud Pezeshkian, landed in New York on Tuesday morning.
The strait has not reopened
On the water, nothing has moved. Kpler counted transits averaging 13 a day across a recent ten-day window. A normal day runs closer to 85. The Joint Maritime Information Center has registered a small lift off the bottom, but merchant traffic remains far under where it should be, and the center keeps its threat rating at the top of the scale. Part of the reason is that mines torn loose from their moorings are still unaccounted for. A gas carrier took damage on September 21 from fragments of a projectile as it headed out of the waterway.
Diesel did not get the memo
Crude has given back eleven dollars from its September high. Fuel has not. US diesel hit a record $6.53 a gallon this month, and gasoil in Europe is still close to $200 a barrel. What is short there is refining capacity, not crude, and a working Saudi pipeline does nothing about that.
US inventories offer little comfort either. EIA figures for the week ending September 11 show commercial crude at 423.43 million barrels and distillate at 107.86 million. Ahead of Wednesday's official count, the American Petroleum Institute put the latest crude build at 1.8 million barrels.
One note for anyone comparing WTI quotes across sites: much of the drop visible on the screen since Friday comes from the front-month contract changing over, not from oil getting cheaper. We explained the roll on Monday.
What to watch
- Whether loadings at Yanbu scale up by Saturday, as Aramco has signaled
- A date for the next round of US-Iran talks
- Daily Hormuz transit counts from Kpler and the JMIC
- Wednesday's EIA inventory report