Saudi Pipeline Attack Rattles Oil Market, Brent Holds Above $108, Diesel Hits Record High
- Saudi Arabia suspended loading at Yanbu after a Houthi attack knocked out the East-West pipeline, risking up to 4% of global oil supply.
- European diesel futures hit a record high on Tuesday as Middle East disruption tightened fuel markets.
- Only 4 vessels crossed the Strait of Hormuz on Tuesday, against a 10 day average of 18.
Diesel has already hit a record high, and the crude spike behind it is still working through haulage and packaging contracts on a lag.
Saudi Arabia has suspended loading at its Yanbu port after Houthi fighters attacked the East-West pipeline that lets the kingdom bypass the Strait of Hormuz, a route that carries up to 4% of the world's oil supply. Brent for November delivery still eased 0.59% on Wednesday to $108.11 a barrel, and WTI for October fell 1.08% to $104.69, as traders weighed that threat against a much larger than expected build in US crude stocks.
American Petroleum Institute data showed US crude stocks up 7.1 million barrels in the week to 11 September, against forecasts of a 1.6 million barrel draw, according to a Reuters survey cited by Attaqa. That build briefly outweighed supply fears on Wednesday, but only after Tuesday's session had already sent Brent up 2.9% and WTI up 4.38%, their highest levels since 19 May.
European diesel futures hit a record high on Tuesday, Attaqa reported, as the disruption in the Middle East tightened fuel markets on top of crude itself. For any manufacturer running its own fleet, or paying haulage contracts with a fuel escalator clause, that record diesel price is the figure that actually lands on the invoice, whatever Brent does the following day.
Shipping data also showed only 4 vessels crossed the Strait of Hormuz on Tuesday, down from 7 the day before and well below the 10 day average of 18. Saudi Arabia has responded by offering more crude cargoes to Asian refiners through ship to ship transfers off Oman's Sohar port, after drone attacks damaged the main pipeline running toward the Red Sea. Hormuz normally carries a fifth of the world's oil and gas supply, so a drop in transits this sharp is worth watching for any business whose ocean freight or gas linked energy contracts route through the Gulf.
Crude and naphtha swings of this size also move faster than most plastic packaging contracts can absorb, since resin pricing formulas typically lag the crude benchmark by weeks rather than days. A business locked into a fixed resin price agreed before this spike will not feel it yet, but the next repricing window will.
What separates businesses that handle this well is knowing exactly which contracts, haulage, packaging, energy, actually move with crude and on what lag, rather than reacting to whatever the headline price does on a given day.