Oil Extends Drop as Saudi Arabia Moves to Restore Vital Pipeline

By Kanoko Matsuyama and Charles Gorrivan

Sep 17, 2026 (Bloomberg) –Oil extended a decline on signs that supply disruptions in the Middle East are set to ease, with Saudi Arabia seeking to partially restore flows along a vital pipeline.

Brent traded near $102 a barrel after losing 2.7% on Wednesday, while West Texas Intermediate was below $100. The kingdom is seeking to return about half the capacity of its key East-West pipeline within days, after shutting it last week following drone strikes. At the same time, Saudi Arabia has sold Asian refiners more oil for collection at locations just outside the Strait of Hormuz.

Still, risks remain as the US-Iran war cuts Middle East energy flows and the Russia-Ukraine conflict drags on. Traders are also watching closely as Yemen’s Houthi militants’ advance toward the critical Bab el-Mandeb Strait at the southern end of the Red Sea and escalate attacks on Saudi oil and shipping assets. 

Prices extended their decline on Thursday after Reuters reported that China had asked Iran to help rein-in the Houthis. 

“The partial reopening of the East-West pipeline and Saudi oil flows through the Strait of Hormuz via ship-to-ship transfers are bearish for crude in the short term, but the market has little room to relax while the Houthi conflict continues,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management in Copenhagen. 

Crude has rallied by more than 70% this year, fanning the inflationary pressures that prompted the Federal Reserve to raise interest rates on Wednesday and signal further tightening. Some inflation-linked trades appeared to reverse on Thursday, with equities rallying and Treasuries falling along with oil.

The decline in oil prices on Thursday also partly reflects some profit-taking after two weeks of gains.

“We see this as a buy-the-dip opportunity across crude and refined products,” Lohmann Rasmussen said. “Prices have eased, but the underlying supply risks have not gone away.”

The East-West pipeline — which carries oil across Saudi Arabia to its Red Sea coast — was damaged in attacks last week, boosting prices. The conduit been a vital workaround to shipments going via Hormuz, which remains contested by Washington and Tehran.

Estimates vary for volumes going through Hormuz, which links the Persian Gulf to global markets. US Energy Secretary Chris Wright told Fox Business 18 million barrels of crude and products went through one day earlier this week, and the seven-day average was 11 million barrels a day. Clarksons Research has put the daily figure at about 8 million barrels.

President Donald Trump is set to meet with Persian Gulf leaders next Tuesday in New York on the sidelines of the UN General Assembly to discuss the next steps in the conflict, Axios reported, citing people with knowledge of the plan.

Also in the US, Congress gave final approval to a bill to hand Trump new powers to impose tariffs on countries buying Russian petroleum products, potentially including China and India. The legislation, which goes to the president’s desk for his signature, has been celebrated by Ukrainian officials eager for signs of Washington’s support in its fight against Moscow’s invasion.

Kyiv has for months been targeting Russian refineries with waves of drone attacks. That has prompted Moscow to ban most exports of diesel to prioritize local supplies, and officials are considering extending the curb through October. US retail prices of the industrial fuel have advanced to a record.

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© 2026 Bloomberg L.P.

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