ING Warns Supply Risks Persist as Saudi Rerouting Caps Crude Bounce
Oil prices have pulled back from recent highs after Saudi Arabia found alternative export routes, but analysts say the underlying risk picture has not improved.
ING Bank analysts said on Tuesday (2026-09-22) that supply-side risks in oil markets remain elevated despite a pullback in crude prices, warning that the easing of immediate Saudi export disruptions should not be read as a broad resolution of the threats facing global supply.5
ICE Brent crude front-month was trading near $104.87 per barrel on 2026-09-24, well below the $108.16 level reached during the peak of supply anxiety earlier in September but still more than 80% above where it started the year, following the outbreak of the US-Iran war and the continuation of the Russia-Ukraine conflict.1,2
The proximate cause of the recent retreat was Saudi Arabia's move to reroute crude shipments through ship-to-ship transfers off Oman's Sohar port after drone attacks forced closure of the country's East-West pipeline during the week of 2026-09-07. People familiar with the matter told traders that Riyadh was offering additional loadings to Asian refiners via this route, blunting some of the supply hit.3
ICE Brent front-month settled at $105.83 per barrel on Wednesday (2026-09-16), down 2.7% on the day, and NYMEX WTI front-month settled at $102.43, off 3.2%, as Saudi Arabia signaled it expected to restore roughly half the East-West pipeline's capacity within days. That followed a two-session run-up of more than 4% on fears of a prolonged closure.2
The retreat came alongside a US crude inventory build that compounded the selling. American stockpiles rose 7.1 million barrels in the week to 2026-09-16, far above the 1.6 million barrel draw the market had expected, adding bearish weight just as the Saudi rerouting news hit.1
The inventory data did little to reassure analysts watching the broader supply chain. The Saudi pipeline attack had already cut output at the affected field to around 127,000 barrels per day, down from roughly 340,000 bpd before the incident, according to ING. That production gap does not disappear because a tanker route opens.5
Diesel and jet fuel markets are absorbing a distinct strain. Analysts said Europe has lost a meaningful portion of its middle-distillate supply from the Middle East, while tensions in Eastern Europe have simultaneously disrupted output at several major Russian refineries. NYMEX heating oil front-month stood at $4.76 per gallon on 2026-09-24, off 0.63% on the session, while RBOB gasoline front-month held at $3.60 per gallon.1
Kpler analyst Matt Smith told CNBC on Thursday (2026-09-17) that six and a half months of Middle East supply losses were now working through gasoline and diesel prices, and expected crude to keep grinding higher. Oil had risen roughly $30 per barrel over that period by his estimate.4
Macquarie analysts offered a partial counterpoint. Flows through the Strait of Hormuz had stayed resilient despite rising tensions, possibly exceeding 7.5 million barrels per day since fighting resumed on August 30, they said. Citi, separately, expects near-term tensions to keep crude elevated but sees the Strait reopening in the fourth quarter of 2026 with support from diplomatic efforts.1
That diplomatic timeline is doing some work in the market. Prices are not at the spike highs of earlier in September, and the Saudi rerouting has demonstrated that Riyadh has some capacity to work around infrastructure damage. Yet the pipeline capacity lost has not been restored, Russian refinery supply into Europe remains curtailed, and diesel inventories on both sides of the Atlantic were already tight before the conflict escalated.2,1
Shipping costs tell part of the story. The cost of moving US crude to Asia on a very large crude carrier from the US Gulf to China hit $44.8 million on Wednesday (2026-09-16), up from $39 million a single day earlier, according to Rigzone. That kind of freight move compresses the economics of alternative supply routes quickly.2
ING's warning that risks extend beyond the Middle East points toward the Russian refinery situation as the less-discussed pressure on European diesel. With the fourth quarter typically driving higher heating oil demand, any further disruption to Russian processing capacity or renewed Hormuz tension could tighten the diesel market before Citi's expected diplomatic resolution materialises. Heating oil's resilience against broader crude weakness on 2026-09-24 suggests traders are not dismissing that path.5,1