A more severe crisis in the international oil market is imminent—and its duration will exceed expectations.

Jabber’s warning is indeed highly significant. An official from Abu Dhabi National Oil Company (ADNOC) likewise believes this issue is no longer confined to a single bottleneck; rather, the entire Persian Gulf oil export system is under strain. Yet, financial markets remain conspicuously calm thus far. Current oil pricing still rests on assumptions about the world through 2026, as traders continue to believe that spare capacity will ultimately stabilize the market. In the media, a large cohort of analysts speak of ‘temporary supply disruptions,’ while investment banks model gradual returns to normalcy. Even one group forecasts a surge in Gulf production once tensions ease. Perhaps reality has already shown that such normalization may no longer exist. The Gulf region is clearly entering a prolonged era of instability—not one of intermittent crises. Infrastructure redundancy remains insufficient, and freight-rate volatility will persist, becoming embedded in benchmark prices. Market participants must adapt to maintain resilience and competitiveness. For the oil market, the result will be a permanent security premium across the entire energy system. This extends beyond crude oil prices to include refining margins, petrochemical feedstocks, liquefied natural gas (LNG) freight rates, marine fuel prices, and shipping rates—effects that will reverberate through global inflation dynamics, as these factors have become increasingly intertwined with Gulf instability. The past paradigm of decoupling geopolitics from markets is gone. What emerges is a world where energy flows are no longer assessed by cost-efficiency—but by survivability. Industry confidence has also shifted, as the very ‘confidence’ underpinning the oil market has been eroded. Once confidence vanishes, physical infrastructure alone cannot restore stability. Buyers will diversify suppliers; traders will hoard flexible products; and the freight market will turn defensive. Meanwhile, insurance capital will withdraw. The result will be market fragmentation. Currently, the gravest misconception lies in treating vessel transits through the Strait of Hormuz as a sign of the system’s normal operation. Today’s Gulf energy architecture increasingly resembles a wartime logistics corridor operating under sustained strategic pressure. ADNOC’s CEO’s statement reaffirms what many industry insiders have long known privately: the Persian Gulf cannot simply be ‘restarted’—and even achieving that by mid-2027 is doubtful. Restoring confidence in Gulf exports requires far more than merely reopening transport routes or stabilizing regional security. It demands protection of digital infrastructure and physical redundancy across pipelines, ports, storage facilities, and terminals—a process requiring significantly more than the next 12 months, and crucially, a degree of geopolitical stability that does not currently exist. Markets still await a miraculous reopening—but ADNOC warns such a miracle will not happen. The above represents analysis and assessment of the short-term international oil situation by our consortium of industry institutions and experts.

A key Saudi oil pipeline has been attacked and shut down; Saudi Aramco will fully suspend crude deliveries to Europe next month. This pipeline exports 5 million barrels per day—what are the implications?

‘Saudi Arabia losing 5 million barrels per day’—this figure, in fact, is not that meaningful. First, let’s unpack how this number was derived: On September 10, several drones launched from Iraq struck Saudi Arabia’s East–West Pipeline, igniting fires at pumping stations in Riyadh and Medina segments. The Saudi Ministry of Energy announced a precautionary shutdown the following day—but note: it was a voluntary shutdown, not one forced by damage. The pipeline stretches roughly 1,200 kilometers, running from Abqaiq in the east across the desert to Yanbu Port on the Red Sea, with a design capacity of 7 million barrels per day—of which approximately 2 million barrels per day supply refineries along Saudi Arabia’s western coast for domestic consumption. Thus, the theoretical exportable volume caps at around 5 million barrels per day. Pre-war, however, the pipeline operated at only about 2.8 million barrels per day; after the Strait of Hormuz became blocked, it was pushed to full capacity, with recent actual throughput hovering between 4 and 5 million barrels per day. Moreover, according to Bloomberg data, Yanbu Port’s average loading volume over the past seven days stood at just ~2.6 million barrels per day. So what truly warrants attention is Yanbu’s inventory level—which can sustain operations for only five to seven days. In essence, since the war began, this pipeline has transformed into Saudi Arabia’s escape route—but now the escape route itself is being attacked. Grasping this shift clarifies the entire logic. Saudi Arabia’s core oilfields all lie along the eastern shore of the Persian Gulf. Under normal conditions, oil is loaded onto tankers and shipped out via the Strait of Hormuz—the world’s most unlikely chokepoint, handling roughly one-fifth of global oil and LNG. As a contingency, Saudi Arabia built this East–West Pipeline back in the 1980s: oil flows east-to-west across the peninsula and loads at Red Sea ports, completely bypassing Hormuz—a testament to Saudi foresight. When U.S.–Israeli military action against Iran began at the end of February, maritime traffic through the Strait collapsed, instantly elevating this former ‘Plan B’ pipeline into Saudi Arabia’s primary export artery—carrying some 4 million barrels per day, accounting for roughly 4% of global supply. Now, however, the backup route has been bombed. With that, the last reliably certain pathway left in the global oil market has itself been proven uncertain. Ironically, Europe now faces the most awkward predicament—not a shortage of oil per se, but the urgent need to secure new sources. Polish traders this week issued over a dozen tenders, locking in an additional 16 million barrels of replacement crude from sources including the U.S., Kazakhstan, Algeria, Azerbaijan, Brazil, and Guyana—a procurement list so long it reads like a roll call, precisely reflecting both source instability and insufficient volume. Furthermore, crude origin imposes major constraints on refineries: refinery units are calibrated over years to specific feedstocks—measured by API gravity, sulfur content, viscosity, metal content, and distillation curves. Switching abruptly from Arab Medium crude to North Sea crude isn’t as simple as changing a supplier’s name.

From Just-in-Time to Just-in-Case: Oil Executives Say World Needs More Export Routes

1 day ago

Oil executives urge shifting from just-in-time to just-in-case supply chains due to regional disruptions. Major firms like TotalEnergies and BP plan alternative pipeline routes to bypass the Strait of Hormuz amidst geopolitical instability.

reuters

2026-10-06

From Just-in-Time to Just-in-Case: Oil Executives Say World Needs More Export Routes

From Just-in-Time to Just-in-Case: Oil Executives Say World Needs More Export Routes

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