Saudi Pipeline Shutdown Lifts Brent by 3 Percent
ICE Brent crude is up 3 percent as Saudi Arabia halts its 7 million barrel per day east-west pipeline. The shutdown follows recent attacks on energy infrastructure and has pushed supply concerns to the forefront of market analysis.
ICE Brent crude is up 3 percent this morning. The move follows Saudi Arabia’s decision to shut down its east-west pipeline. This pipeline handles 7 million barrels per day. It serves as a critical bypass for oil exports when the Strait of Hormuz faces disruption. The shutdown comes after a series of attacks on Saudi energy infrastructure. Market participants are uncertain about the extent of damage. They are also unsure how long the pipeline will remain offline. These factors are adding volatility to the energy sector.
The International Energy Agency cut its demand forecast for this year. It now expects global oil demand to fall by 2.5 million barrels per day. This is a reduction of 940,000 barrels per day from its previous estimate. The agency cites ongoing disruptions in the Middle East. Despite lower demand, global inventories fell by 95 million barrels in August. Cumulative draws since February have reached 507 million barrels. This averages to 2.8 million barrels per day. The IEA expects demand to recover by 2.6 million barrels per day in 2027.
Middle distillate cracks hit record highs
Middle distillate markets are extremely tight. The ICE gasoil crack is at a record high of 84 dollars per barrel. US diesel cracks have broken above 110 dollars per barrel. This strength follows Russian bans on diesel exports. Moscow imposed these bans after Ukrainian attacks on its refineries. The ban was set to expire at the end of September. However, extensions are possible. The combination of Gulf disruptions and Russian export limits has tightened the global market.
Speculators increased their net long position by 4,318 lots last week. The total reached 265,753 lots. This increase was driven mostly by short covering. Fewer new long positions were added. This suggests caution among market participants. Traders are reluctant to take on additional risk in the current uncertain environment. The lack of fresh money entering the market limits further upside potential.
USDA adjusts corn and soybean forecasts
The USDA lowered its 2026/27 US corn ending stocks estimate. The new figure is 1.57 billion bushels. This is a cut of 86 million bushels. The reduction is due to weaker production and lower beginning inventories. US corn production was revised down by 213 million bushels. The new production forecast is 15.8 billion bushels. Global corn ending stocks were cut by 2.6 million tonnes to 272.1 million tonnes. This aligns with market expectations.
US soybean production was raised to 4.535 billion bushels. This is an increase of 16 million bushels. The revision reflects slightly higher harvested acreage. US soybean ending stocks were lowered by 10 million bushels to 310 million bushels. Stronger export demand drove this reduction. Export forecasts were raised by 25 million bushels to 1.685 billion bushels. These changes reflect shifting global trade dynamics. The data was reported by GN markets/commodities (en-US).
