Saudi oil exports resume, oil prices fall; Putin's party wins big in parliament—how should we view this?

Welcome to 'Xiao Kao Shijie' — a column covering the Russia-Ukraine conflict, global affairs, humanities, and history! Today, we begin again with developments in the Middle East. 【1.1】As market concerns over geopolitical tensions in the Middle East ease, international oil prices weakened at the start of the new trading week. By the close on the 21st, NYMEX WTI crude fell USD 4.52 to USD 95.78 per barrel, down 4.51%; London Brent crude dropped USD 3.53 to USD 100.34 per barrel, down 3.4%. McKay, Senior Commodities Strategist at TD Securities, stated that crude oil exports through the Strait of Hormuz are increasing, and overall crude transport volumes across the Middle East have recovered to approximately 80% of pre-Iran conflict levels. Over the past two days, some readers in the comment section questioned U.S. Central Command General Cooper’s claim that thousands of commercial vessels had passed through the Strait since the outbreak of hostilities. It appears General Cooper is a liar—and so too is Mr. McKay of TD Securities. We must absolutely not believe them. Instead, we must believe Iran possesses the full capability to impose a long-term, total blockade of the Strait of Hormuz. You’re telling me WTI and Brent prices have fallen back to USD 100? Impossible! This is entirely an illusion manufactured by decadent, corrupt, chronically dishonest capitalism. The true global oil price right now is USD 200—or no, USD 300 per barrel! The U.S. imperialists will surely ‘bite the dust’ soon! Returning to normal: Why did international oil prices fall? Primarily due to news suggesting Saudi Arabia’s East-West Pipeline may partially resume operations within days. Bloomberg reported on the 16th that Saudi Arabia plans to restore about half the pipeline’s transport capacity within days. And as of today—the 22nd—Reuters reports that Saudi Arabia has already restarted the East-West Pipeline, albeit at a low initial throughput. It seems my earlier criticism of Saudi Arabia for failing to hold onto its ‘rice bowl’ was somewhat hasty. In fact, Saudi Arabia does have repair teams—and they work efficiently. Additionally, Reuters reported on the 21st that on the 20th, Saudi Aramco loaded approximately 14 million barrels of crude onto seven Very Large Crude Carriers (VLCCs) at Ras Tanura port in the Persian Gulf. This figure is enormous: seven VLCCs carrying 14 million barrels—averaging 2 million barrels per vessel—and these figures derive from actual satellite imagery and tanker-tracking data, not false official Saudi announcements. Reuters interprets this as a sign of partial recovery in Saudi crude exports. Meanwhile, Saudi crude flows through the Strait of Hormuz averaged about 2.9 million barrels per day over the six days ending September 18—far exceeding August’s average of roughly 700,000 barrels per day. Driven by these positive developments, international crude futures prices have declined each of the past four trading days. What’s especially intriguing is this: Saudi Arabia merely loaded 14 million barrels onto VLCCs—before any ships even departed—and yet international oil prices still fell. What does this signify? Recall: Ras Tanura lies on Saudi Arabia’s eastern coast along the Persian Gulf! This indicates that analysts at major trading firms—whose annual internet expenses run into millions of dollars—are more confident than some ordinary readers that this oil can indeed transit the Strait of Hormuz. Thus, it’s not only Iran that can manipulate global oil prices via Strait blockades.

After drone attacks on Saudi pipelines, Gulf exports expand; seven super-tankers load 14 million barrels—Brent breaks $100 intraday while WTI plunges over 6%.

On September 13, drone strikes forced Saudi Arabia to shut down its East-West Pipeline, halting all crude loading operations at the Yanbu port on the Red Sea coast. Yet, within less than a week, Saudi Aramco executed a large-scale rerouting of its export logistics—a speed that exceeded expectations among some market participants. According to Reuters, citing Vortexa data, Saudi crude loading volumes via the Gulf route averaged approximately 3.7 million barrels per day since September 12—up from around 2.9 million barrels per day earlier this month. By contrast, loading volumes via the Red Sea route averaged about 3.9 million barrels per day between September 1 and 11. In a report released last Friday, JPMorgan analysts noted satellite data showing Saudi crude flows through the Strait of Hormuz rose to an average of 2.9 million barrels per day over the past six days—up sharply from just 700,000 barrels per day in August. The single-day loading of roughly 14 million barrels last Sunday further confirms Saudi Arabia’s swift ability to shift export focus toward Gulf ports—and suggests the supply disruption may be shorter than the market’s most pessimistic prior forecasts. Oil Price Retreat: Geopolitical Premium Erosion Meets Diplomatic Optimism Brent crude briefly fell below USD 100 intraday, driven by two converging forces: improved supply expectations following Saudi export restoration, and the unwinding of geopolitical risk premiums amid renewed prospects for U.S.-Iran diplomacy. Bob Yawger, Director of Energy Futures at Mizuho, remarked: “Just days ago, the possibility of U.S.-Iran talks seemed extremely remote—this is a step in the right direction.” According to Al Jazeera, Iran has conveyed conditions for resuming negotiations via mediators, confirmed by Iranian security chief Mohsen Rezaei. Notably, actual hostilities in the region have not ceased. Yemen’s Houthi movement claims to have launched attacks on Saudi Aramco facilities in Riyadh and the Red Sea city of Yanbu, and continues military operations along the Red Sea coast. A report on Thursday, September 17, cited Iranian sources stating that, after Saudi Arabia sought assistance, a major power had requested Iran’s help in restraining the Houthis. Geopolitical uncertainty remains—but current market pricing has shifted its focus from risk premiums to supply-recovery expectations. Sales Strategy Shifts Eastward: Asian Refineries Benefit, European Supplies Tighten Following the pipeline shutdown, Saudi Aramco adjusted its sales strategy markedly: canceling some crude cargo deliveries to European customers while increasing sales destined for Asian markets—loaded at eastern ports along the Strait of Hormuz. According to media reports last week quoting trade sources, Saudi Arabia will sell approximately 60 million barrels of crude from Ras Tanura port this month and next, with deliveries completed via ship-to-ship transfers at Sohar port in Oman. This arrangement means Asian refineries will receive more abundant Saudi crude supplies, while European buyers face temporary supply shortages—forcing them either to seek alternative sources or absorb spot-market premium costs. For Asian refineries, the arrival of increased Saudi supply coincides with falling oil prices, easing procurement cost pressures. However, ship-to-ship transfers also introduce greater logistical complexity and uncertainty regarding port arrival timing.

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