Saudi Arabia Resumes Yanbu Oil Loadings as East-West Pipeline Restarts; Crude Tumbles

Saudi Arabia is loading crude at Yanbu again. After drone attacks knocked out the East-West pipeline in mid-September and shut the kingdom's Red Sea export route, tanker loadings have resumed at the port, and the barrels are already showing up in the market: about 2 million a day, according to trade sources, with satellite imagery showing nearly 10 million barrels being loaded at Yanbu and the neighboring Al Muajjiz terminal.

The restart, quantified

The pipeline shut down on September 11 after drone strikes that Saudi Arabia blamed on Iraqi militias damaged pumping stations, cutting off crude exports from Yanbu. Operations restarted on September 22 at a low pumping rate, and Aramco told customers Monday evening what its October loading schedule from Yanbu would look like, according to a source at an Asian refiner. A cargo was loaded late last week.

Two trade sources separately estimated crude loadings at Yanbu at about 2 million barrels per day since last week, Reuters reported Tuesday. Vessel tracker TankerTrackers.com said European Space Agency imagery captured September 27 showed nearly 10 million barrels of crude being loaded at Yanbu and Al Muajjiz, with refined-product loadings also visible and 40 tankers identified in the area.

The pipeline itself is running again but well below full strength. Ship-tracking firm Kpler estimated current throughput at around 2.65 million barrels per day in a Monday note, rising to between 3 million and 4 million bpd in the coming days, with a full return to the pre-attack rate of roughly 5.5 million bpd taking about another month. People familiar with the matter told Dow Jones the pipeline is operating at about 3.5 million bpd, with part of the flow going to domestic refineries. Kpler also recorded the first inventory build at the Yanbu terminal since the attack, about 1 million barrels on September 22. Three independent readings confirm the restart: trade sources on loadings, satellite imagery on barrels, and Kpler on throughput.

Tuesday's market receipt

Crude fell on the news. Front-month U.S. West Texas Intermediate futures settled down 3.5% at $89.38 a barrel, the lowest front-month settlement since August 31, making seven down sessions out of the last ten, according to Dow Jones. Front-month November Brent settled down 2.56% at $102.59, the largest one-day dollar and percentage decline since September 21 and the lowest settlement since September 22.

The selloff reversed much of Monday's rally, when both benchmarks had climbed on fresh obstacles to U.S.-Iran diplomacy. Dow Jones Market Talk attributed Tuesday's pressure to the restart of flows through the East-West pipeline and indications of more oil making it through the Strait of Hormuz. "The market is... watching Hormuz and the total Middle East outflows closely," Rystad Energy analyst Claudio Galimberti said in a note.

A regional rebound that still leaves a hole

The Yanbu restart lands on top of a broader September rebound. Crude exports from the Middle East's key producers rebounded to 16.328 million barrels per day in September, the highest since the U.S.-Israeli war on Iran began in late February, Kpler data cited by Reuters showed Monday. The figure remains about 3.2 million bpd below February's 19.513 million bpd, or just under 80% of pre-conflict levels.

Saudi Arabia led the recovery. The kingdom is on track to ship about 5.4 million bpd in September, more than double August's 2.446 million bpd, with loadings at the Gulf port of Ras Tanura jumping to about 3.25 million bpd from 929,000 in August, still about half of February's 6.411 million. Much of the gain came through the Strait of Hormuz, where flows were set to reach about 9.719 million bpd, and 19 very large crude carriers carrying 2 million barrels of Saudi oil each exited the strait last week. The figures exclude vessels that may have crossed with transponders switched off.

What to watch next

The timetable to full pipeline recovery comes first. Kpler puts a full return to about 5.5 million bpd roughly a month away, with the disclosed rates pointing to a gradual ramp. How much of the restored flow reaches export markets, versus domestic refineries, will determine how quickly Red Sea loadings return to pre-attack volumes.

Second is the Strait of Hormuz. The strait carried about a fifth of the world's daily crude and liquefied natural gas before the conflict, and its recovery to about 9.7 million bpd is doing as much to lift regional exports as Yanbu is. Diplomacy remains fragile: Monday's rally was driven by fresh obstacles to U.S.-Iran talks, and the Red Sea route still faces threats to Saudi-linked shipping around the Bab el-Mandeb. France's announced deployment of soldiers, radar and air-defense systems to protect the Yanbu refinery and the pipeline is the clearest signal the threat picture has not settled.

What remains unknown is whether Aramco can hold the ramp without another interruption, how much of the restored throughput actually reaches the export market, and whether the pipeline's recovery changes Tehran's calculus over the Strait of Hormuz, where the leverage that has kept oil elevated all month still sits.

Tuesday brought the first hard, quantified evidence that the damage is being repaired rather than managed around: tankers at Yanbu, barrels counted from space, and a published throughput number. The hole in regional exports is still about 3.2 million barrels a day. But the direction, for the first time since the drones struck, is toward normal.