With international oil prices falling and U.S. officials reportedly holding talks with Houthi representatives in Oman—where the Houthis stated they will not target U.S. or Israeli vessels—which pieces of information deserve attention?

In my previous article, I argued that this recent price surge above $100 per barrel was short-lived. The Houthis were able to generate such a significant shock largely because they caught Saudi Arabia off guard, seizing a valuable strategic window. From a military capability perspective, there remains a vast gap between the Houthis and the Saudi-led coalition. Saudi Arabia possesses the most advanced air force and missile defense systems in the Middle East; over the past week alone, Saudi warplanes carried out more than 450 airstrikes across seven Yemeni provinces. More importantly, Saudi Arabia has begun retaliating and actively seeking international support. Crown Prince Mohammed bin Salman met with Egyptian President Abdel Fattah el-Sisi in Cairo, where both sides emphasized the necessity of safeguarding freedom of navigation and security in the Bab el-Mandeb Strait and the Red Sea. Although Egypt does not plan direct military involvement, it pledged to leverage its influence across the Arab world to coordinate efforts aimed at securing Red Sea shipping lanes. The critical variable lies in whether Saudi Arabia is willing to bear greater costs. If Riyadh resolves to deploy more military resources toward the Bab el-Mandeb region—and expel the Houthis from their key coastal strongholds along the western Red Sea coast—it would be militarily feasible. However, Saudi lives are highly valued: ground operations rely heavily on mercenaries, and Riyadh is reluctant to incur substantial domestic casualties. Although the Houthis control a sizable territory, their forces are dispersed along Yemen’s lengthy western coastline, and their logistical supply lines are fragile. Under sustained Saudi air strikes, their capacity to maintain a blockade on the Bab el-Mandeb Strait is limited. Once safe passage through the Bab el-Mandeb Strait is restored and Saudi Arabia reopens its Red Sea crude export route, the current geopolitical premium supporting oil prices will rapidly dissipate. Indeed, as Saudi countermeasures intensify, U.S. crude prices have already fallen below $100—down roughly 10% from recent highs. That said, the downside potential for oil prices is constrained by another factor.

Signals emerge suggesting the restart of Saudi Arabia’s East–West Pipeline, and Yanbu Port may resume crude exports as early as this week.

Following the news, Brent crude continued its decline on Tuesday, dropping below the $100-per-barrel threshold. Meanwhile, according to CCTV International News, Iranian President Masoud Pezeshkian departed Tehran aboard a special flight today (September 22) for New York to attend the high-level week of the 81st United Nations General Assembly. He is scheduled to deliver a speech during the General Debate on the morning of September 23 local time—i.e., tomorrow evening Beijing time. The convergence of these two developments signals a phase shift in market sentiment. Yet analysts caution that uncertainties remain regarding the pipeline’s restoration timeline, and it remains unclear whether U.S.–Iran negotiations will yield substantive progress; thus, whether the geopolitical risk premium can continue to recede remains to be seen. Pipeline Restart: A Critical Route Bypassing the Strait of Hormuz for Red Sea Deliveries The East–West Pipeline is Saudi Arabia’s core infrastructure for transporting crude oil to the Red Sea port of Yanbu—bypassing the Strait of Hormuz. On September 10, the pipeline was struck by drones launched from Iraq, damaging a pumping station and forcing Saudi Aramco to urgently reroute exports back to the Persian Gulf. Since then, numerous tankers have loaded crude at the Ras Tanura terminal. According to Bloomberg, Saudi Aramco has been racing against time to bypass the damaged pump station and partially restore pipeline throughput, aiming to return the pipeline to full capacity within approximately six weeks. Several oil traders report sightings of tankers arriving at Yanbu Port—an early sign that pipeline operations are poised to resume. Neither Saudi Aramco nor the Saudi Ministry of Energy responded to requests for comment. The impact of the pipeline shutdown has already fully manifested in the market. According to informed sources, Saudi Aramco has notified at least two European refiners that it will be unable to fulfill their contracted crude allocations for October under long-term agreements.

Oil Swings to Loss as Deep Saudi Price Cut Offsets Yemen Concern

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Saudi Aramco cut Arab Light crude prices to Asia by $5 per barrel, hitting a 2020 low and pushing oil prices down despite Yemen conflict risks. Brent and WTI declined while OPEC+ kept production quotas unchanged amidst volatile geopolitical conditions.

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