Saudi Arabia reportedly plans to restore half the capacity of its critical pipeline within several days; secret U.S.–Houthi contacts have surfaced.

Saudi Arabia is urgently working to repair its energy arteries disrupted by drone attacks, while geopolitical maneuvering around the Red Sea and Bab el-Mandeb Strait quietly intensifies. According to CCTV News, citing U.S. sources on Wednesday, September 16, U.S. officials recently held talks with Houthi representatives in Muscat, the capital of Oman. The meeting reportedly took place at the U.S. Embassy in Muscat over the weekend of September 12–13. Reuters, citing informed sources, reported that during the talks, the Houthis conveyed to the U.S. side that they do not intend to attack U.S. or Israeli vessels and affirmed their commitment to the 2025 bilateral ceasefire agreement. One Yemeni source added that the Houthis also stated they would refrain from attacking any commercial vessels—except those belonging to Saudi Arabia. None of the above reports have yet been officially confirmed by any party. Recent reporting indicates that, under pressure from the pipeline shutdown and the forced rerouting of export flows, Saudi Arabia is striving to restore approximately half the capacity of its East–West Pipeline within several days, while simultaneously ramping up spot sales near the Strait of Hormuz. Meanwhile, a previously little-known channel of contact between the United States and the Houthis has come to light—adding further uncertainty to an already highly tense maritime region. This development complicates market assessments of the Red Sea situation. London Brent crude prices have surged past $107 per barrel; the earlier East–West Pipeline disruption had already placed millions of barrels per day of exports at risk. Saudi Aramco’s increased spot sales near Hormuz—and the informal U.S.–Houthi engagement—both point toward a situation marked by high uncertainty: Saudi Arabia is bearing the brunt of the pressure alone, while Washington’s stance remains ambiguous. Pipeline bypass efforts underway, full restoration targeted in six weeks According to Bloomberg, citing an anonymous source familiar with the matter due to its sensitivity, Saudi Aramco is working to bypass the damaged section of the East–West Pipeline, aiming to restore about half its capacity within several days and achieve full operational resumption in approximately six weeks. Neither Saudi Aramco nor the Saudi Ministry of Energy has commented publicly on this plan. The East–West Pipeline traverses Saudi Arabia from east to west, linking eastern oilfields with the Red Sea port of Yanbu. During periods when the Strait of Hormuz faced disruptions due to Iranian hostilities, the pipeline served as a critical alternative route for Saudi exports—bypassing the strait altogether. Following last week’s drone strike—which halted pipeline operations—the question of how much oil can be moved, and when operations will resume, has become a core variable closely tracked by crude traders. At present, the aforementioned timeline remains an internal Aramco target—not an official commitment. Aramco pivots to Hormuz, launching large-scale spot sales to Asian buyers In response to the East–West Pipeline shutdown, Saudi Aramco has swiftly adjusted its export strategy. According to Bloomberg, citing multiple traders familiar with the transactions, Aramco sold roughly 20 million barrels of crude oil to Asian refiners this week, with loading and delivery scheduled for September–October outside the Strait of Hormuz. Buyers include Chinese refineries and other East Asian importers. These cargoes are loaded via ship-to-ship transfers in the Gulf of Oman—meaning the buyer’s pickup point lies outside the Strait of Hormuz, and the seller (not the buyer) bears the shipping risk associated with transiting the strait. Meanwhile, Aramco has delayed deliveries of some cargoes originally scheduled for shipment from the Red Sea port of Yanbu to European customers and at least one East Asian refinery; the scale of these delays remains unclear.

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U.S. retail sales rose 1.2% month-on-month in August, underscoring consumer resilience and supporting growth expectations. The 1.2% increase far exceeded the consensus forecast of 0.8% and marked the strongest monthly gain in nearly five months. Core retail sales—used in GDP calculations—surged 1.4%, with 12 out of 13 categories posting gains, indicating continued strength in consumer demand. Although elevated oil prices inflated nominal values—and thus created a divergence between nominal spending and weak consumer confidence—the data modestly lifted market sentiment and reinforced the Federal Reserve’s rationale for further tightening. Foreign holdings of U.S. Treasuries fell to a nine-month low in July; China’s holdings hit a new low since 2008. According to the U.S. Treasury Department, foreign holdings of U.S. Treasuries declined by $50.4 billion month-on-month in July, reaching a nine-month low. Japan—the largest foreign holder—reduced its holdings by $12.8 billion, marking its third consecutive monthly decline and hitting a more than one-year low. China—the third-largest holder—cut its holdings by $15.4 billion, extending its decline for two straight months and falling to the lowest level since 2008. The United Kingdom—the second-largest holder—defied the trend, increasing its holdings by $58.4 billion and setting a new record high, surpassing its previous peak set in May. France and Canada posted the largest declines among other major holders, shedding $41.5 billion and $30 billion, respectively. Saudi Arabia launched 52 airstrikes in a single day; the Houthis vow retaliation. Yahya Saree, military spokesperson for Yemen’s Houthi movement, issued a statement accusing Saudi Arabia of conducting airstrikes across southwestern Taiz Governorate, central Al-Bayda Governorate, and northern Saada, Al-Jawf, and ‘Amran governorates. The statement alleged that schools, bridges, roads, and other civilian infrastructure were struck, warning that such attacks would not go unanswered. Saudi authorities, meanwhile, stated they would continue striking Houthi targets; the Houthis claimed Saudi forces had carried out over 350 airstrikes against Yemen in recent days. Saudi Arabia accuses Houthis of crossing a red line by drone-striking Mecca, threatening escalated retaliation. Tensions between Saudi Arabia and the Houthis have sharply escalated: Saudi Arabia accused the Houthis of launching a drone attack on Mecca—a move it declared a new red line—and threatened significantly stronger retaliation. With the Houthis expanding their offensive, Saudi Arabia intensifying its aerial campaign, and the East–West Pipeline struck and shut down, Saudi Arabia has canceled some crude-loading schedules bound for Europe. As Red Sea shipping remains disrupted and freight rates through the Strait of Hormuz surge, global energy supply risks are further exacerbated. Saudi Arabia reportedly plans to restore half the capacity of its critical pipeline within several days; secret U.S.–Houthi contacts surface. Saudi Aramco aims to restore approximately half the throughput capacity of its East–West Pipeline—shut down by drone strikes—within several days, targeting full restoration in about six weeks. Simultaneously, Saudi Arabia is substantially increasing spot sales near the Strait of Hormuz, having sold roughly 20 million barrels of crude to Asian refiners this week. During last weekend’s talks with U.S. officials in Oman, the Houthis stated they do not intend to attack U.S. or Israeli vessels, nor any commercial ships—except those affiliated with Saudi Arabia. Polish oil company Orelen, anticipating a Saudi supply disruption lasting until November, has urgently procured 16 additional crude cargo lots. Middle East crude prices surge; Oman crude hits $132. After the East–West Pipeline was struck by drones and forced offline, daily supplies of several million barrels of crude were disrupted. Crude premiums outside the Strait of Hormuz spiked sharply, pushing Oman crude to $132.09 per barrel. Tighter supply is fueling inflation expectations and bond yields; markets are closely watching when the pipeline resumes operations—and whether Saudi Arabia can offset the shortfall through alternative export routes.

Saudis Seek to Resume Half of Key Oil Pipeline Within Days

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Saudi Aramco plans to resume half the capacity of its East-West oil pipeline within days following drone attacks, with full restoration targeted in six weeks, significantly impacting global crude supply and regional pricing.

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