Crude oil spent the week as the market’s wildest story. Brent crude touched roughly $109 a barrel early in the week after attacks on Saudi energy infrastructure shut down one of the world’s most important oil bypass routes, then slid back toward $100 on Friday as Saudi Arabia moved to calm supply fears. West Texas Intermediate finished the week at $99.49, down 0.50%, according to Morningstar’s weekly market update.
The scare began the weekend of September 10 to 11, when drone strikes hit Saudi Arabia’s East-West pipeline and the kingdom shut the line as a precaution. The 1,200-kilometer pipeline runs from Saudi oil fields to the Red Sea port of Yanbu and carries roughly 4 to 5 million barrels a day, about 4 to 5% of global supply, making it the kingdom’s main route for bypassing the Strait of Hormuz (Stocktwits, Angel One). On Monday, September 14, Yemen’s Houthi forces said they had fired missiles and drones at the Khamis Mushait military airbase in southern Saudi Arabia, and later in the week the group seized Mayun Island at the mouth of the Bab el-Mandeb strait, a chokepoint that handles around 4 million barrels of crude a day (Angel One).
At the peak of the fear trade on September 14 and 15, Brent crude futures reached about $109.30 a barrel and WTI surged above $106 (Stocktwits). Commodity vessel traffic through the Strait of Hormuz, which normally carries about one-fifth of global oil supplies, dropped to fewer than 10 transits a day over the weekend, compared with a 10-day average of 14 (Angel One).
Then the pressure eased. On Wednesday, September 16, Saudi Arabia reportedly offered more crude via Hormuz after the pipeline attack, and prices retreated (CNBC via Money Talks News). By Friday, investors were weighing fresh Saudi-Houthi strikes against signs of additional Saudi crude reaching global markets, and WTI fell 1.9% to $100.05 on the day, briefly dipping below $100 (CNBC via Money Talks News).
Uncertainty hangs over the repair timeline. U.S. Energy Secretary Chris Wright reportedly said flows could resume “within days,” but other estimates put repairs at five to six weeks, though partial operations may restart earlier (Stocktwits). Stephen Schork, principal of The Schork Group, warned that the U.S. Strategic Petroleum Reserve could be drawn down to its operational limits by November (Stocktwits).
For households, the damage at the pump is already real. The national average diesel price hit a record $6.40 a gallon, up more than 70% from $3.71 a year ago, while average gasoline prices climbed to roughly $4.44 a gallon (BigGo Finance). Gasoline futures are up 30% since early August, and the August CPI report showed prices up 3.4% from a year earlier, with gasoline the primary driver (Fortem Financial, The Motley Fool).
What to watch next: whether pipeline repairs begin on the optimistic timeline or stretch toward six weeks, and whether the reported diplomatic engagement between the U.S. and the Houthis produces anything concrete (New York Post). Oil near $100 is feeding directly into the inflation data the Fed is watching, and that loop, prices to inflation to rates, is now the central tension in markets.
