Saudi Pipeline Shutdown Lifts Brent 3% as Diesel Cracks Hit Records

Saudi Arabia has shut its 7 million barrels per day east-west pipeline following attacks on its energy infrastructure, according to ING. ICE Brent traded around 3% higher in the wake of the shutdown.

Refined product markets moved further. ING reported the ICE gasoil crack at fresh record highs of around $84/bbl, while US diesel cracks broke above $110/bbl. The nationwide average US retail diesel price rose to $6.069 per gallon on Friday, the first time the average has moved above $6, according to Dow Jones Energy data cited by FXEmpire. US diesel prices have risen around 28% over the past three months and more than 70% since the beginning of the year.

Saudi supply was already contracting before the pipeline outage. The IEA reported that Saudi Arabia's crude supply fell by 2.3 million barrels per day in August to 6 million barrels per day, its lowest level in more than three decades.

On the demand side, the IEA now forecasts global oil demand to fall by 2.5 million barrels per day year-on-year in 2026, a downgrade of 940,000 barrels per day from its previous forecast, according to ING. Even so, the agency estimates global observed oil inventories fell by 95 million barrels in August, taking cumulative draws since February to 507 million barrels.