Oil markets are being repriced by both realised supply tightness and renewed geopolitical risk across the Middle East. Restricted flows through the Strait of Hormuz have already created a physical supply deficit, while the attack on Saudi Arabia’s East–West pipeline has raised the risk of further export disruption. Brent’s next move will depend on whether that prospective risk becomes a measurable decline in Saudi exports.
Two Supply Shocks Have Repriced Oil Since the Iran War Began
Oil’s repricing has unfolded in two stages. After the conflict disrupted Hormuz traffic on February 28, Brent rose from $72.87 to above $100 by March 12 as Gulf supply tightened. Renewed attacks on Saudi energy infrastructure then pushed Brent from $101.21 on September 9 to $108.41 intraday on September 14, as the market priced the risk of further export losses.
Current prices therefore reflect an existing physical supply deficit caused by the Hormuz disruption, compounded by expectations that the Saudi pipeline attack could further restrict exports. The first supports Brent above $100; the second accounts for the additional move toward $108.
The First Price Driver: Realized Supply Tightness After the Hormuz Disruption
The first price driver is a physical supply deficit that alternative routes have been unable to offset. Petroleum flows through Hormuz fell from an estimated 21.6 million barrels per day in the fourth quarter of 2025 to 4.9 million barrels per day in the second quarter of 2026, while available bypass capacity before the conflict was estimated at only 3.5–5.5 million barrels per day (Sources: EIA & IEA). As a result, rerouting could replace only a fraction of the disrupted flows.
The deficit is also evident in production and inventories. The IEA estimates that global oil supply fell by 1.6 million barrels per day in August, while observed inventories have declined by approximately 507 million barrels since February. Together, these data show that the Hormuz disruption is already tightening the physical market and supporting higher oil prices.
The More Recent Price Driver: Expectations of Further Tightening After the Saudi Pipeline Attack
The more recent price driver is the market’s expectation that the shutdown of Saudi Arabia’s East–West pipeline could further restrict exports. The pipeline is the kingdom’s principal route for bypassing Hormuz and carried approximately 4–5 million barrels per day before it was shut following attacks on September 10 (Source: Reuters). This places a major share of Saudi Arabia’s bypass export capacity at risk, allowing an extended outage to affect prices before its impact appears in export data.
Inventories at Yanbu could maintain loadings for an estimated five to seven days, temporarily insulating exports from the loss of pipeline inflows (Source: Reuters). If the outage extends beyond that window, fewer barrels would be available for loading and the disruption could translate into a further decline in Saudi exports.
This limited inventory buffer explains why the pipeline risk is already reflected in prices. With inventories depleted, Gulf output constrained and Hormuz traffic still depressed, even the prospect of further export losses is enough to lift prompt prices.
What Will Determine the Next Move in Oil Prices
The key observation window is September 15–18, when Yanbu’s estimated five-to-seven-day inventory buffer may begin to run down. The following indicators, in order of importance, will show whether the pipeline risk is becoming an additional physical supply deficit:
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Yanbu exports: Compare total loaded barrels with the early-September rate of approximately 2.9 million barrels per day, using cargo volumes rather than vessel counts alone. A decline toward or below August’s 1.5 million barrels per day would indicate that the inventory buffer is running down and support higher prices.
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East–West pipeline flows: Track throughput against the pre-attack rate of 4–5 million barrels per day. A material recovery would reduce the probability of an export shortfall, while persistently low flows would increase it.
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Hormuz traffic: A sustained recovery would ease the existing physical supply deficit. Continued disruption, combined with falling Yanbu exports, would constrain both major Saudi export routes and increase the risk of another move higher in oil.
Oil Prices Now Hinge on a Second Supply Shock
With the physical market already tightened by the Hormuz disruption, the key question is whether the Saudi pipeline outage adds to the deficit. Yanbu exports and pipeline throughput will determine whether Brent’s recent gains hold or extend.
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Frequently Asked Questions
Why did oil rise above $100 per barrel?
Oil moved above $100 because reduced regional petroleum flows created a physical supply deficit, while uncertainty around a major export pipeline increased expectations of further market tightening.
How much have regional petroleum flows declined?
Estimated petroleum flows through a key regional shipping route fell from 21.6 million barrels per day in the fourth quarter of 2025 to 4.9 million barrels per day in the second quarter of 2026.
Why does the East-West pipeline matter to oil markets?
The pipeline is an important alternative export route that previously carried approximately 4–5 million barrels per day, equivalent to around 4–5% of global oil supply.
What indicators could determine the next move in oil prices?
Traders should monitor East-West pipeline throughput, export volumes from Yanbu, regional shipping activity, global production levels and changes in oil inventories.
Will oil prices continue rising?
Oil prices could remain supported if pipeline flows stay limited, exports decline and regional shipping activity remains constrained. A meaningful recovery in supply flows could ease market tightness.
