Citi sees oil prices supported by geopolitical risks and demand

Investing.com -- Oil prices rose back above $108 per barrel on Tuesday after Saudi Arabia shut down its East-West pipeline, according to Citi analysts. Brent crude had briefly fallen toward $104 per barrel following reports of potential talks between Gulf Cooperation Council nations and Iran, combined with a weaker demand outlook from the International Energy Agency.

The proposed GCC-Iran meeting was later canceled, and the pipeline shutdown reversed the earlier price decline. Brent crude reached above $108 per barrel, while Dated Brent at one point rose above $130 per barrel.

Saudi Arabia confirmed on Thursday that its East-West pipeline was attacked and subsequently shut down. The pipeline has a capacity of 7 million barrels per day and was flowing around 5 million barrels per day before the shutdown, allowing for roughly 4 million barrels per day of Saudi exports through the Red Sea.

Cargo-tracking data from OilX showed Saudi crude exports from Yanbu at 1.8 million barrels per day in September month-to-date with 13 vessels loaded, compared to 1.6 million barrels per day and 35 vessels in August.

Citi analysts stated that Saudi Arabia holds inventories of around 14 million barrels at west coast export terminals, with an additional 12 million barrels at Sidi Kerir and Ain Sukhna. The bank said near-term export commitments could be met through stock draws even if the outage extends beyond a few days.

Chinese crude imports have increased, refinery purchasing remains strong, and the upcoming maintenance season is expected to be light. Multiple new pipeline projects have been proposed by the United Arab Emirates and Iraq.

Citi expects near-term developments to support oil and petroleum product prices before a potential reopening of the Strait of Hormuz during the fourth quarter of 2026.

You May Also Be Interested In

• OpenAI: after the Hugging Face incident, we committed to conducting a much broader review of actions taken by our models
• Humana surges: Barclays bets big on Medicare star ratings rebound
• OpenAI says its agents leaked some user images - Reuters