Saudi Arabia Zeros October Crude for Europe While Rerouted Barrels Flow to Asia
Aramco has zeroed October crude allocations for all European term buyers; the Oman rerouting flows to Asia, leaving European refiners to source replacements in a tight spot market.
Saudi Aramco told all European term customers on Friday (2026-09-18) that they will receive no Saudi crude in October, a blanket cut applying to every term buyer on the continent, according to people familiar with the decision. The drone strike on Saudi Arabia's East-West pipeline on September 10 put 3.5 million to 4 million barrels per day of Saudi exports at risk and had already triggered cancellations and deferrals of cargoes to European buyers into October and November.7,5
The market's initial read was bearish. ICE Brent crude front-month for November delivery fell 2.7% to settle at $105.83 on Wednesday (2026-09-16), and NYMEX WTI crude October delivery shed 3.2% to $102.43, after Aramco offered additional cargoes through Oman's Sohar port and US crude inventories posted a 7.1 million barrel build against expectations of a 1.6 million barrel draw. ICE Brent front-month stood at $103.37 as of September 20.4,3,6
The Oman rerouting is not going to Europe. Aramco has sold roughly 60 million barrels from its Persian Gulf terminal at Ras Tanura for September and October loading, with buyers in China, South Korea, India and Japan. The program restores 1 million to 1.5 million barrels per day of Saudi Gulf exports — for Asian refiners. European term buyers receive zero.7
The East-West pipeline had been moving 4 million to 5 million barrels per day from Saudi fields to the Red Sea port of Yanbu, serving as the kingdom's main bypass around the Strait of Hormuz. Its shutdown has forced European refiners to scramble for alternative barrels, Saxo Bank reported. Even a partial capacity restoration would benefit Gulf-loading routes already committed to Asian buyers rather than redirect supply westward.7,2
The product squeeze compounds the crude shortage. Analysts said Europe has lost substantial diesel and jet fuel supply from Middle Eastern refineries while ongoing tensions in Eastern Europe have disrupted output at several major Russian refineries. Those two channels have been cut simultaneously.6
US diesel data show how thin global distillate buffers have become. EIA figures show nationwide diesel stockpiles rose 1.6 million barrels in the latest reading but remain at their lowest seasonal level since at least 2000. EIA projections put inventories on track to fall below 100 million barrels for the first time since 2003. The agency raised its fourth-quarter 2026 diesel price forecast by 14% to $5.55 per gallon, even as retail diesel has already crossed $6 per gallon. NYMEX heating oil front-month was at $5.05 per gallon as of September 20.1,4
The Dubai-Brent spread makes the regional split visible in prices. Dubai crude recorded $115.46 per barrel as of September 20, roughly $12 above ICE Brent crude front-month at $103.37. Asian buyers are absorbing Ras Tanura barrels at a steep premium; European refiners locked out of those cargoes will bid on North Sea and West African spot grades, which price off Brent. That competitive pressure is not yet embedded in the forward curve.7
Macquarie data show Hormuz flows stayed resilient since fighting resumed on August 30, possibly exceeding 7.5 million barrels per day. Citi expects the strait to reopen in the fourth quarter of 2026 through diplomatic effort. OPEC trimmed its 2026 global oil demand growth forecast for the fifth consecutive month to 380,000 barrels per day, down 200,000 barrels per day month-on-month, adding a demand-side offset to the supply shock. Crude markets have surged almost 80% this year following the outbreak of the US-Iran war and the prolonged Russia-Ukraine conflict.3,1,4
A faster Hormuz reopening, or evidence that European refiners have secured October spot replacements at manageable differentials, would validate the bearish consensus. Aramco's November allocation schedule is the concrete test: zero volumes again would push European refiners back into a spot market already stretched on distillates, forcing a premium that $103 Brent does not yet reflect.7,1