Global oil markets showed signs of stabilization following a pivot in Saudi Arabia’s export strategy. Saudi Aramco redirected all crude loadings to Persian Gulf ports after the East-West pipeline sustained damage from drone attacks, with loadings from Ras Tanura continuing despite risks of Iranian drone strikes in the Strait. The company’s decision to maintain offerings to Asian buyers helped calm market anxieties, allowing Brent crude to settle below $105 per barrel.
Repair efforts for the damaged 7 million barrel-per-day East-West pipeline continued, with Saudi Aramco anticipating partial restoration within days. Separately, Canada announced expanded investment tax incentives for oil sands development, positioning new projects to face effective tax rates of just 6.4%. Container shipping through the Suez Canal also showed signs of recovery, with 27% of Asia-Europe capacity now transiting the route, up from 17% in early August, though security concerns persisted.
Regional production challenges emerged across multiple jurisdictions. Libya resolved a dispute affecting North Hamada field operations, avoiding broader output disruptions. Independent Chinese refiners in Shandong reduced run rates to 50-60% due to crude shortages, while Russia extended diesel export restrictions through October amid ongoing supply constraints. Vietnam pursued approval for a new 155,000 barrel-per-day refinery complex, while India warned against proposed U.S. tariffs on Russian crude imports that could threaten energy security.
Liquefied natural gas flows showed tentative recovery through the Strait of Hormuz, with at least two LNG cargoes transiting the passage and multiple ship-to-ship transfers recorded off Oman. Shell-led LNG Canada anticipated possible approval of a Phase 2 expansion that would double project capacity to 28 million tonnes per annum by October. Russian ESPO Blend crude premiums reached record highs amid robust Chinese demand, while U.S. officials indicated potential resumption of Strategic Petroleum Reserve releases to address supply pressures.
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