Oil prices fell Thursday after Saudi Arabia began shifting crude exports through the Strait of Hormuz to offset a damaged pipeline, easing fears of a bigger supply shock. The disruption is still rippling through wider energy markets, driving a record wave of supertanker orders and adding to a growing LNG supply crunch in Europe and Asia.
Saudi Arabia's Hormuz workaround eases oil prices
Brent crude traded 2.8% lower at $102.89 a barrel on Thursday, while West Texas Intermediate briefly dipped below $100 a barrel before settling down 1.8% at $100.54. Prices had still gained more than 12% this month before Thursday's pullback.
The retreat came after Saudi Arabia began routing additional crude cargoes to Asian refiners through ship-to-ship transfers near Oman's Sohar port, a workaround for the shutdown of its Red Sea export terminal at Yanbu. Rapidan Energy expects Saudi crude exports to fall by 400,000 barrels per day this month because of the pipeline outage, though higher shipments through the Gulf and Hormuz should partly offset the loss. The consultancy told clients: "Risk remains skewed toward a larger disruption if the pipeline outage extends past September."
Owners bet on longer routes with record tanker orders
The disruption is reshaping shipping demand well beyond Saudi Arabia. Shipowners have ordered more than twice as many supertankers this year as in all of 2025. The buying spree is worth over $20 billion, the largest in at least 25 years. Data from Signal Group show 217 Very Large Crude Carriers ordered so far in 2026, against 93 last year.
Owners are betting that oil will keep traveling longer distances as buyers diversify away from Middle Eastern supply. VLCC spot rates have climbed above $500,000 a day, up from about $132,000 in February before the war, according to Allied Shipbroking.
LNG supply crunch adds pressure heading into winter
Natural gas markets face a similar squeeze. LNG prices have room to rise by about a third from current very high levels as Europe heads into winter with some of its lowest storage levels in two decades. Spot LNG prices in Northeast Asia have jumped $2.70 from last week to $28.40 per million British thermal units, Energy Intelligence assessed.
European gas storage sites are less than 70% full, compared with 82% at this time in 2025. Wood Mackenzie chairman Simon Flowers said a colder-than-usual winter could push LNG from near $30 per MMBtu now to $40 per MMBtu, equivalent to roughly $240 a barrel for Brent.
Sources: US Top News and Analysis (CNBC), Commodities & Futures News, Commodities Analysis & Opinion
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