Saudi Arabia is breaking pessimistic expectations of a Persian Gulf crude supply disruption through a dual-route export setup that runs in parallel via the Red Sea and the Strait of Hormuz, causing premiums in Middle East physical markets to narrow sharply within just one month.
Preliminary data from ship-tracking agencies show that Saudi Arabia's daily crude exports so far in October have held at levels close to wartime highs, performing broadly in line with September. At the same time, exports from other major Persian Gulf producers are also returning toward pre-conflict levels, and expectations of tight supply are beginning to loosen.
The recovery in supply has fed directly into physical prices. The Oman-Dubai crude spread, which gauges the strength of the Gulf spot market, fell earlier this month to its lowest since July, and by Tuesday had dropped to about $6 per barrel, compared with nearly $34 per barrel in September 鈥?a decline of more than 80% in a single month.
East-West Pipeline Restored, Dual Routes Unblock Supply Bottleneck
The core of Saudi Arabia's export resilience lies in the reopening of the East-West crude pipeline. The pipeline had been forced offline by an attack, leaving Saudi exports temporarily dependent entirely on the east coast route through the Strait of Hormuz.
After the pipeline resumed operation, Saudi Arabia reactivated the export channel at the Red Sea port of Yanbu, allowing it to use two export routes simultaneously and maintain high-volume shipments while coping with sustained harassment from Yemen's Houthi forces.
According to data provider Vortexa, Saudi Arabia's daily exports via the Red Sea direction (mainly Yanbu port) so far in October reached 2.5 million barrels, above September's 2.4 million barrels; daily exports via the Persian Gulf direction stood at 4 million barrels, a slight pullback from September's 4.2 million barrels, as that route continues to be disrupted by intermittent attacks.
Combining both routes, Vortexa counts Saudi Arabia's average daily exports in October at about 6.5 million barrels, essentially flat versus September's 6.6 million barrels.
However, data from different agencies diverge notably. Tankertrackers.com estimates daily exports so far in October at about 6.99 million barrels, close to pre-conflict levels; Kpler estimates just 5.4 million barrels, below September.
The main reason for the data discrepancy is that a large number of tankers have begun switching off satellite transponders to avoid attack risks, making tracking more difficult. This information blind spot also poses a challenge for traders and investors assessing the region's supply situation.
Buyers Return to Yanbu Port, European Spot Volumes Rebuilt in Tandem
As export channels reopen, Saudi state oil company Saudi Aramco is actively restoring its buyer base at Yanbu port.
Citing people familiar with the matter, Bloomberg reported that Aramco has asked some Asian buyers to resume lifting cargoes from Yanbu starting in November. These buyers had suspended Yanbu liftings for as long as three months, instead taking oil via shuttle tankers and pipeline connections through Egyptian Mediterranean ports to avoid Houthi threats in the Red Sea.
In the European market, as Bloomberg previously reported, Aramco has also notified European buyers whose contracts were previously cancelled that they can participate in spot tenders for this month's and next month's cargoes to make up for earlier shortfalls.
Meanwhile, Saudi Arabia has reported to the Organization of the Petroleum Exporting Countries (OPEC) that its September output rose by one-third to a wartime high of more than 8.3 million barrels per day. Saudi domestic refineries typically consume about 3 million barrels per day, but the Yanbu refinery (with a processing capacity of 400,000 barrels per day) remains shut down due to Houthi attacks.
Persian Gulf Supply Overall Moving Toward Repair
Beyond Saudi Arabia, export conditions for other major Persian Gulf producers are also normalizing.
Kuwait relies entirely on exports through the Strait of Hormuz, and its oil company executives have said exports have returned to pre-conflict levels; Iraq's exports last month were also close to pre-war levels; the United Arab Emirates has been the most successful in moving tankers through the Strait of Hormuz, with production rising to a record high, according to International Energy Agency data.
Improvements across multiple supply routes have combined to push down the risk premium in Middle East physical markets. The Oman-Dubai spread plunged from nearly $34 per barrel in September to about $6 per barrel this week, indicating that earlier market concerns about Persian Gulf supply have been alleviated to a considerable extent.
Yet the regional situation has not become completely stable. Houthi attacks on Saudi airports and oil and gas facilities continue, and recent strikes have effectively affected the normal operation of Riyadh's financial district and exerted spillover pressure on Saudi Arabia's overall economy. The decline in tanker information transparency also keeps uncertainty alive in the market's assessment of true supply volumes.
For Saudi Arabia, maintaining high oil price revenues during wartime while safeguarding export volumes remains a dual test that requires continuous handling.
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