Saudi Aramco's East-West Pipeline has resumed pumping after an 11-day shutdown, but restoring pre-attack flow could take six to eight weeks. Meanwhile, tanker rates on the Gulf-to-China route have surged to $1.2 million a day, keeping the oil market tight even as prices retreat.
Saudi Arabia's 7 million b/d East-West Pipeline resumed pumping at a low rate after an 11-day shutdown, potentially allowing Yanbu exports to restart. But restoring the pre-attack flow of around 4 million b/d could take six to eight weeks.
The restart has offered oil market bears a lifeline, yet unprecedented freight rates and rising diesel prices point to structural tightness ahead. ICE Brent futures slid toward the $100 per barrel mark.
Tanker rates spike on Gulf risk
The standoff around the Persian Gulf has spilled into the freight market. Daily earnings on the Gulf-to-China route soared to $1.2 million this week, with Saudi Arabia's rising supplies straining tanker availability further.
French oil giant TotalEnergies fixed the Kuwait Prosperity tanker last week at $75 million, equivalent to $38 per barrel. This week, similar offers have climbed closer to $100 million. As a result, freight now makes up at least 25% of the total cost of crude delivered to Asia, up from 5-6% in 2025, according to Bloomberg — greatly eating into oil companies' prospective profits.
Asian refiners adapt to the squeeze
Facing scarce and expensive VLCCs, Asian refiners are turning to smaller vessels for long-distance voyages. Chinese refiners importing Brazilian crude are switching from VLCCs to 1-million-barrel Suezmaxes.
Source: OilPrice.com
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