Oil Pullback Masks Fresh Supply Threats in Saudi Arabia and Libya

Brent crude fell to about $100 a barrel from a recent high near $108, but ING strategists warned that supply risks remain elevated. The bank pointed to disruptions in Saudi Arabia and a new production cut in Libya.

Prices eased Friday and Monday as Saudi oil shipments through the Strait of Hormuz proved higher than feared. Hopes for diplomatic progress between Washington and Tehran also helped cool concerns about prolonged supply losses.

The decline was not steady. Brent and U.S. crude futures rose Tuesday morning as traders weighed the chance of talks against continued risks to oil flows. By Monday, Brent had fallen 3.4% to $100.34, still well above its roughly $72 level earlier in the summer.

Saudi Arabia’s East-West pipeline, which carries crude to the Red Sea port of Yanbu while bypassing Hormuz, was shut after a September 10 drone attack. ING said the disruption had tightened European crude supply, with some North Sea grades trading at steep premiums to benchmark prices.

Libya added a separate risk. An armed group closed a valve on the pipeline linking the Sharara oilfield to the Zawiya export terminal, cutting field output to around 127,000 barrels per day from about 340,000, according to ING.

That reduction matters because it lands on a market already dealing with uncertain Gulf exports. Lower flows can tighten the amount of crude available to refiners, even if traders expect diplomacy to restore shipping routes.

ING strategists Warren Patterson and Ewa Manthey said investors were balancing hopes for peace talks against fresh interruptions to supply. The price retreat, in their view, does not mean the underlying risks have passed.

Traders will watch whether Saudi export routes recover and whether Libya’s pipeline resumes normal operation. Any lasting improvement in Gulf shipping or diplomatic ties could ease prices; further outages would leave oil vulnerable to renewed gains.