Saudi Arabia’s critical East-West Pipeline restarted operations following an 11-day shutdown, providing potential relief to oil markets. However, the facility is currently operating at reduced throughput, with industry analysts uncertain about the timeline for restoring full capacity. Officials estimate it could take six to eight weeks to achieve pre-disruption flow rates of approximately 4 million barrels per day, as several pumping stations remain under repair.
Despite the pipeline restart, multiple indicators suggest structural tightness persists in global oil markets. Very Large Crude Carrier (VLCC) tanker rates have reached unprecedented levels, with daily earnings on Gulf-to-China routes reaching $1.2 million this week. Freight costs now represent at least 25% of total delivered crude costs to Asia, compared with 5-6% in 2025, substantially eroding profit margins for oil producers and traders. Asian refiners are responding by shifting to smaller vessel classes, with some Chinese refiners switching from VLCCs to Suezmax-class tankers for longer distance voyages.
Diesel prices have also risen sharply, with water navigation challenges on Germany’s Rhine River limiting fuel deliveries ahead of winter. The River Rhine’s water levels at the Kaub chokepoint are forecast to fall to critical lows, halting standard barge navigation on the Upper Rhine and restricting diesel supply movement in the region.
International Crude Brent futures slid toward the $100 per barrel mark amid the pipeline restart announcement, yet persistent freight rate elevation and fuel price increases suggest underlying supply constraints remain. Geopolitical factors continue influencing market dynamics, with potential tariff negotiations between China and the United States, Houthi control of key maritime chokepoints, and ongoing conflicts affecting refinery operations across multiple regions.
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