Following the attack on Saudi pipelines, Saudi Arabia expanded its Gulf exports, with seven supertankers carrying 14 million barrels of crude oil. Brent crude broke $100 per barrel during trading, while WTI crude fell by more than 6%.

Saudi Aramco restructured its crude oil export routes at a faster pace than the market expected, causing the supply disruption premium that had accumulated due to the pipeline attack to quickly recede. International crude oil futures came under pressure and accelerated their decline on Monday, with Brent crude briefly falling below the $100 mark.

According to data from TankerTrackers.com, Saudi Aramco loaded approximately 14 million barrels of crude oil onto seven Very Large Crude Carriers (VLCCs) in the Gulf region on Sunday. Media reports indicate that satellite imagery shows the tankers docked near the port of Rastanura. This loading volume sends a strong signal of a partial recovery in Saudi exports, directly suppressing bullish sentiment in the oil market and initiating pricing for a rapid resumption of Saudi exports.

On Monday, September 21, Eastern Time, Brent crude oil futures closed down $3.53, or 3.4%, at $100.34 per barrel. During the session, Brent crude briefly fell below $100 for the first time since September 9. US WTI October crude oil futures closed down 4.51% at $95.78 per barrel, both hitting new closing lows since September 8, having touched $94.22 at one point during the session, with the daily decline widening to over 6%.

By Monday's close, both Brent and WTI crude oil had fallen for four consecutive trading days, marking their longest losing streaks since June 16 and June 24, respectively, with cumulative declines of 7.73% and 9.5% over the four days.

Meanwhile, market expectations for progress in US-Iran diplomacy have risen, further depressing geopolitical risk premiums. Trump has indicated his willingness to meet with Iranian President Masoud Pezeshkian, who will attend the UN General Assembly this week. PVM Oil Associates analyst Tamas Varga stated that investors are pinning their hopes on a breakthrough in this week's negotiations.

Loading volume exceeded expectations, and export routes were rapidly restructured.

On September 13, a drone attack forced Saudi Arabia to shut down its east-west oil pipeline, bringing crude oil loading operations at the Yanbu oil port on the Red Sea coast to a complete halt. However, Saudi Aramco completed a large-scale switch of export routes in less than a week, a speed that exceeded the expectations of some market participants.

According to Reuters, citing Vortexa data, Saudi Arabia's crude oil loadings via the Gulf have averaged about 3.7 million barrels per day since September 12, up from 2.9 million barrels per day earlier this month; while from September 1 to 11, Saudi Arabia's loadings via the Red Sea averaged about 3.9 million barrels per day.

In a report last Friday, JPMorgan analysts pointed out that satellite data showed that Saudi Arabia’s daily crude oil flow through the Strait of Hormuz has risen to 2.9 million barrels in the past six days, compared to only 700,000 barrels per day in August.

The shipment of approximately 14 million barrels of oil last Sunday further confirms Saudi Arabia's ability to rapidly shift its export focus to Gulf ports, and also indicates that the duration of this supply disruption may be shorter than the market's most pessimistic expectations.

Oil prices fall: Geopolitical premiums diminish and diplomatic expectations resonate.

Brent crude oil fell below $100 during the session, driven by a combination of two factors: first, improved supply expectations due to the partial recovery of Saudi exports; and second, a reduction in geopolitical premiums triggered by the reopening of diplomatic channels between the US and Iran.

Bob Yawger, director of energy futures at Mizuho, said that just days ago, the possibility of a US-Iran meeting seemed extremely distant, "This is a step in the right direction." According to Al Jazeera, Iran has conveyed its conditions for resuming negotiations through mediators, a fact confirmed by Iranian security chief Mohsen Rezaei.

It is worth noting that the actual conflict in the Middle East has not ceased. The Houthi rebels in Yemen have claimed to have launched attacks on Saudi Aramco facilities in Riyadh and the Red Sea city of Yanbu, and are continuing their military operations along the Red Sea coast.

A report on Thursday, September 17, cited Iranian sources as saying that following Saudi Arabia's appeal, major powers have requested Iran's assistance in restraining the Houthi rebels. Geopolitical uncertainty remains, but the market's current pricing focus has shifted from risk premiums to expectations of supply recovery.

Sales strategies shift eastward, benefiting Asian refineries while European supplies tighten.

Following the pipeline disruption, Saudi Aramco made significant adjustments to its sales strategy: canceling some crude oil sales to European customers and instead increasing sales to Asian markets via ports east of the Strait of Hormuz.

According to media reports last week citing trade sources, Saudi Arabia will sell approximately 60 million barrels of crude oil from Ras Tanura port this month and next, with delivery to Sohar port in Oman via ship-to-ship transshipment. This arrangement means that Asian refineries will have access to a more abundant supply of Saudi crude oil, while European buyers will face a temporary tightening of supply, needing to turn to other sources to fill the gap or bear the pressure of spot premiums.

For Asian refineries, the arrival of increased Saudi supply coincided with a drop in oil prices, easing procurement cost pressures; however, the ship-to-ship delivery method also means more complex logistics and some uncertainty in arrival time.

Subsequent risks: The progress of pipeline repair and the sustainability of exports remain uncertain.

While current export data indicate a recovery in Saudi supply, the market remains wary of potential risks. No clear timetable has been released regarding the progress of the east-west pipeline repairs, and a Saudi Aramco spokesperson declined to comment. If pipeline repairs fall short of expectations, or if the Houthi rebels launch a new attack on Gulf export facilities, the current export routes relying on the Strait of Hormuz will face even greater pressure.

In addition, there are signs of supply disruptions from Libya. Massoud Suleman, chairman of Libya's National Oil Corporation, told Reuters on Monday that production at the country's Sharara oil field had declined somewhat, but did not specify the reason, adding further uncertainty to the global supply chain.

The current decline in oil prices has, to some extent, reflected market optimism regarding a recovery in Saudi exports. However, if actual export data fails to materialize or geopolitical tensions escalate again, oil prices could potentially rise once more. The actual progress of pipeline repairs and the sustainability of exports through the Strait of Hormuz will be key indicators for future market pricing.

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