Saudi Arabia Reportedly Restarts East-West Pipeline

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Nine days after a drone found it, and bombed it, Saudi Arabia has its East-West Pipeline back. Reuters reports it may even load crude at Yanbu on the Red Sea later Tuesday, which is the kind of maybe that moves $2 a barrel. Brent dropped to its lowest price since September 8 on the news.

The pipe has been doing the work of the Strait of Hormuz as that waterway has been dealing with its own drone (and mines, and Houthi rockets) issues as of late. It hauls about 4 million barrels a day across the entire width of Saudi Arabia to the Red Sea, roughly 4% of everything the world burns, and every one of those barrels skips Hormuz. It is currently the most valuable piece of plumbing on the planet and it lives under an open desert.

So the party the oil market threw Tuesday is a party for a trickle. Aramco wants back to 4 million. It is currently pumping at what Reuters sources called a low rate, and a security source told them full restoration could take weeks, meaning the entire global energy market is now waiting on a guy with a welding torch in Tabuk province.

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Traders skipped the waiting. Tankers are already steaming to Port Said and Sidi Kerir for ship-to-ship transfers, standing outside the restaurant before anyone takes the chairs off the table.

Gas is around $4.48 against $3.18 last year, diesel at a record $6.51 versus $3.70, but it will come down if the pipe holds and nobody flies anything else into it. The word "if" is doing a lot of work in that thesis.